We’re often struck by how little – even experienced business owners – understand about the role of investment bankers. Then it occurs to us, even some in our field may misunderstand our role.

One thing we’re certain of, when a business owner comes to us, whether that’s to sell a business or to acquire one, that person becomes the client. It’s our role to represent our client’s interests, to help construct the deal that suits their needs. Period.

When it comes to a deal, you can’t serve both sides.

The Revelation

It was during a recent discussion with a colleague that we realized how uneasy we’ve become about the emerging trend of business owners hiring investment bankers who “specialize” in one field. That specialization may actually work against the clients, and those clients may not even know it. These specialists may advertise their specialization as an advantage, convincing clients that representation by an industry insider works in their favor.

But think about it. A so-called, self-described “specialist” who works in only one field – say in IT managed services or equipment rental companies – has limited himself to one, finite set of buyers. Maybe even in one region of the country. There are only so many entities in that space. This “expert” has relationships with those already in the field, relationships with a set number of potential partners with whom he may want to tap again and again.

So when the client, imagine a business owner transitioning away from a mature, profitable business in retirement, seeks representation for a potentially complicated negotiation, who is this specialist investment banker really representing? The business owner client will be a one-and-done arrangement. The business is sold, the client retires, end of relationship. But the guys across the table may be backed by some hefty capital. There could be more deals to be made there down the line.

Is this client still the consumer? Or have they become the product?

We’ll tell you now, it’s impossible to represent two interests in the same deal. That’s just business. When we’re representing a client, that’s our sole interest. The other guys, they have their own representation. We’re fair and honest, but there’s no mistaking who we represent. Everyone at the table knows it.


We have another issue with investment bankers working in one, narrow space: disruption. It’s never the car you see that hits you, and it’s never the industry shift you see coming that upturns your business. Businesses, even entire fields, evolve. Put on blinders, keep working with the same folks, and you’re in an echo chamber. As the saying goes, when your only tool is a hammer, every problem looks like a nail.

A specialist in lodging might advise a hotel owner there’s only so much real estate in town, his hotel will only go up in value. Did he see Air BnB coming? Think about how many businesses and industries have been disrupted in the last 20 years.

We’re not saying we won’t consult an expert in the field for advice and insight. We’ll look for every bit of information we can get. We’ll use every tool we can to help a client. But we want to see the issue from every angle, from multiple perspectives. “That how we’ve always done it” is great advice. Until it isn’t.

You’re Already an Expert (In Your Field)

When a client comes to us ready to sell their business, when they have done the homework, kept track of their competitors, worked to maximize efficiency, do they need another specialist in their field? They are already their own specialist. They know who the big players are. They know the industry trends.

When it comes to making potentially the largest financial transaction you’ll make in your life, you need an advocate who will negotiate a transaction that works in your best interest. Someone who will challenge conventional wisdom. Someone who will assemble the complete team and spot the gaps and vet the offers. Someone who has your back.

That’s the kind of specialist we want in our corner. That’s what an investment banker does. SDR is your advocate.