Building an M&A Team: Selecting an Investment Banker

Selling a company is a complex, time consuming process. It is therefore important to assemble the right team of advisors to manage the process for the owner(s) of the company being sold. The right team can be the difference between receiving full value for your company and selling at a discount. With the right advisors, you are likely to see a noticeable contrast in your results, including keeping much of the proceeds vs. giving large sums up in taxes, protecting shareholders post-transaction vs. dealing with potential liabilities for years after the transaction, meeting your personal financial goals vs. being disappointed in long-term prospects, and even whether or not the transaction takes place. Often a seller’s first team member is an investment banker, or M&A advisor.

The investment banker is responsible for the entire process of selling a company. They act as the “quarterback” and help to coordinate the activities of the other transaction team members. Of all the advisors on the transaction team, the seller will spend the most time with the investment banker.

Selecting an Investment Banker

When selecting an investment banker, a seller should consider a variety of factors. Among these are experience, track record, industry knowledge, support team, and personal fit.

An Investment Banker with Experience

Most investment banks are staffed with professionals with a large amount of transactional experience. Many senior M&A advisors have been part of hundreds of transactions and have gained valuable experience through them. You should consider the types of transactions (sell-side representation, capital raise, buy-side representation, ESOPs, and more) in which the banker has experience compared to your anticipated transaction. It is also useful to consider what experience the banker has outside of managing transactions. Seller (or buyers) often find it beneficial if their advisor has operational, strategic, or specialized experience. For example, a banker with a degree in science, who was an executive in a technology company, and has deep transactional expertise might be the ideal representative in the sale of a technology-enabled business.

A Firm’s Track Record

Another area to review when selecting a banker is the track record of their firm—and that of the lead banker. Most investment banks have a listing of past transactions that can provide an indication of the types and sizes of deals they have managed. Discussions with the lead banker can also provide insight to their negotiating style and how they have performed for clients in the past with respect to end results of the transaction. Always remember that the lead banker will be responsible for negotiating the terms of the transaction and will have a large impact on the overall value of the deal conducted.

Industry Knowledge

Industry knowledge can often be very beneficial when conducting a transaction. Bankers with operational or transactional experience in an industry typically have a good idea of who buyers will be and what valuation and types of deals will be done. Industry expertise helps a banker paint the best picture of a company for sale and recognize potential synergies that will make it more valuable. Such knowledge can also support a banker in preparing a seller to go to market, as the banker is more likely to make suggestions for improvements in the business operations that buyers will value or that will enable the sales process to be more streamlined. While industry knowledge is useful, a banker that has a history of selling to one particular buyer or even a small handful of buyers within an industry can potentially be at odds with delivering the best value to a seller, as there is a potential conflict of interest between maintaining the relationship with a buyer and negotiating for the best deal for the seller.

Having a Support Team

The process of selling a company requires a huge amount of effort. Much of the work related to the sales process is conducted by the investment bank. The investment bank is typically responsible for:

  • Helping the company prepare to enter a sales process;
  • Creating the process strategy;
  • Authoring marketing materials;
  • Identifying potential buyers, verifying their ability to buy, validating contact information, and reviewing with the seller/management team;
  • Contacting buyers and coordinating Non-Disclosure Agreements and Information Exchange;
  • Building and maintaining a Virtual Data Room;
  • Soliciting and negotiating Indications of Interest and Letters of Intent;
  • Reviewing offers with the seller;
  • Coordinating buyer-seller interaction—including management calls and meetings;
  • Managing the diligence process;
  • Reviewing legal documents to assure business terms are captured;
  • Coordinating the efforts of all of the transaction team advisors; and
  • Acting as the first point of contact for the seller on all sales process questions.

Because the amount of work is so large, it is important that the investment bank hired to conduct the sales process has the appropriate amount of resources available to assign to the task. This includes the identification of the investment banking professionals that will be responsible for the project—for middle market transactions, this typically consists of one senior banker and one or two junior bankers. Sellers should also consider what other potential resources the investment bank can bring to bear (are they part of a larger organization with a broad array of services?) as well as professional working relationships they maintain with law firms, lenders, or business services providers.

Finding the Right Fit

Finally, since the investment banker typically interacts with the seller more than any other advisor, it is very important that there is a strong personal fit. A sales process usually takes more than six months and can potentially take three to four times longer. Often, the process of selling a company has many ups and downs and can be an emotional event for the seller. If a seller is working with an investment banker that they just do not like, there is a very good chance the process will end poorly—or no transaction will occur at all.

To learn more about Sikich’s investment banking services, past transactions, and our team, please visit our page.

Read “Building an M&A Team: Selecting an Attorney” here.


This publication contains general information only and Sikich is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or any other professional advice or services. This publication is not a substitute for such professional advice or services, nor should you use it as a basis for any decision, action or omission that may affect you or your business. Before making any decision, taking any action or omitting an action that may affect you or your business, you should consult a qualified professional advisor. In addition, this publication may contain certain content generated by an artificial intelligence (AI) language model. You acknowledge that Sikich shall not be responsible for any loss sustained by you or any person who relies on this publication.

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