They can greatly enable you achieving your euphoric exit event
As David Herman of Diamond Capital in Los Angeles says, “the investment banker is the auctioneer for your business when it comes time to sell it”.
Although the investment banker adds great value to your transaction, his statement is accurate. The Investment Banker will become the representative who takes the lead role in finding you a buyer for your business, just as the auctioneer does.
A common question is what is the difference between a business broker, that also represents companies for sale, and an investment banker? Generally, the smaller transactions, say $10M or less in total payout value, are in the purview of a broker and larger transactions are the focus of investment bankers.
What could the investment banker do for you in your future transaction that you really shouldn’t do for yourself?
- They will ensure you are ready to successfully support an acquirer’s due diligence
- They will put a “book” together, also referred to as a confidential memorandum or pitch deck that will tell the story of what your company is and why it’s of value to an acquirer
- They will identify potential acquirers and manage them moving through a deal process
- They will play the point role in negotiating the offer you get from an acquirer and if there are multiple offers made, they will help navigate how to select the final one
- They will play point in managing the data room that will be used for the acquirer’s due diligence and will manage all the information flow between you the seller and the acquirer’s team
- They will work with your attorney on preparing various deal documents necessary to complete the transaction
Trying to do these things yourself could have you leaving a lot of money on the table. And it could cause unnecessary stress for yourself and your team and certainly could cause frustration for the acquirer when they see inefficiencies in the deal process as you try to represent yourself.
But, what an investment banker can’t do is ready you and your business to ensure you have a product/service that is unique, a market position that is enviable, a pricing authority that helps you command attractive profit levels, good visibility to ongoing growth and the list goes on. These aren’t 9th inning steps, as to achieve these things that an acquire will reward you for, it requires preparation steps much earlier than the 9th.
Give us a call and we can help you think through how best to get your business prepared ahead of engaging a banker. Having the right preparation will be the difference between a successful sale and an unsuccessful one.
