HIRING THE RIGHT INVESTMENT BANK
A seller can assess an investment banker’s (IBs) capabilities through several key criteria:
- Experience and Track Record
- Review the investment banker’s history of successfully executed transactions, especially as to similar size and complexity
- Discuss the issues likely to arise during the sale process and their solutions
- Seller Concerns
- Ensure that they fully explain the many decisions facing the seller(s)
- The IB should provide alternative choices for the above issues
- Business Acumen
- Evaluate their understanding of the seller’s industry, market trends, and competitive landscape
- Determine if they are considerate of the current sellers’ marketplace, and not just pushing for a new client
- Exit Planning Expertise
- Understand which professionals are needed to maximize your value and ease of sale
- What is the competence level of professionals with whom they collaborate
- Transaction Expertise
- Assess their experience with different types of transactions (sell-side, buy-side and capital raises).
- Look for their ability to handle complex negotiations and deal structuring
- Review their valuation expertise within your industry
- Network and Buyer Read
- Confirm their access to a broad and relevant network of potential buyers or investors
- A well-connected banker can create more competitive bidding and better deal terms
- Strategic Approach and Value-Add
- Review their proposed strategy for positioning and marketing the company
- Determine if they provide insights beyond standard processes, such as industry contacts, market insights, IP valuation expertise, etc.
- Their personal experience in operating a business and buying or selling them
- Communication and Transparency
- Observe their communication style, responsiveness, and transparency
- Effective communication is crucial for trust and smooth deal progress
- Cultural Fit and Compatibility
- Ensure their approach aligns with your company culture and goals
- A collaborative and proactive partner often yields better outcomes
- Fee Structure and Terms
- Understand their fee arrangements – retainer and success fees and ensure they align incentives with you