In a recent article on the Axial Forum, SDR’s Director Karl Edmunds helps provide insight on how to pick the right investment bank to help you sell your business.
First off, find an investment bank that has experience in your industry. The bank’s expert understanding of your niche market and business model will likely help you find the best deal.
Equally as important is finding a bank that has experience with deals at your price point. “You want your investment bank to have the staff to serve you and to be willing to dedicate the necessary resources to close a deal in line with your company’s value, regardless of the other deals the bank might be working on,” Karl says. “Your advisor should understand your business — your operations, geographic coverage, and the competitive landscape of your industry.”
Ensure your banks has the correct approach to valuation. Do they provide specific information on market conditions? Do they have concrete examples of what comparable businesses have sold for? The article also advises you to choose a bank that leaves you with a new perspective on your business and realistic prospects for sale after your first few meetings.
Next, the bank needs to understand your unique goals. “You should have a sense of the bank’s intangible qualities and its deal process. While ultimately all business owners are after the best valuation, it shouldn’t come at the expense of due diligence,” Karl says. “Too many investment banks become fixated on price and then, when they find a buyer, they try to convince you, the business owner, that the deal represents market value, and that the buyer is the only one out there. You should be assured that your investment bank has your needs and objectives in mind, not just its own.”
Hiring an honest advisor is also crucial. “Exceptional investment bankers form strong relationships with their clients and help them craft a legitimate and defensible story without drifting into spin. Find a banker who doesn’t hesitate to give you clear and courageous advice even though they might get fired,” the article states.