The phone rings. A big investment banking firm – a firm you’ve seen in the news – is on the line. They’re interested in managing the sale of your lower middle market business. It’s flattering. But why is a firm known for billion-dollar deals suddenly interested in you?
An article in the Wall Street Journal offers an explanation. As the megadeal merger market slows, the Journal reports big firms are reaching into smaller markets in search of volume.
We’ve seen this before, big investment banks dabbling in markets they normally wouldn’t serve. Ask yourself what changed, your needs as a business owner or their need for new deals – any deals. Will they still be interested in your needs when the bigger market heats up? Will you get a firm’s Principal on the phone if things go sideways, or are you getting the B team? At SDR Ventures, we’ve guided owners of privately held, mid-market businesses through countless transactions. We pride ourselves on serving our clients’ best interests in any market condition.
There’s a particularly chilling line in this article, “Some banks are positioning the middle market as a way for younger bankers to prove themselves.” Would you accept less experienced surgeons looking to “prove themselves” with your open-heart surgery?
Nothing against the big firms for what they do: serve huge clients. They have the teams and tools in place to handle massive, international deals. But the way we see it, an investment banking firm isn’t a matter of name recognition, it’s about the right relationship and fit. You’ve put a lot of yourself into your business. When it’s time to step away, look beyond a big name and find the team that’s right for you.
Read the full Wall Street Journal article here.