How to Select an Investment Banker
Choosing an investment banker is one of the most important decisions a firm can make. These bankers deal with selling securities, that is, raising capital, specializing in your specific field. In addition, they also search your field for purchasing opportunities, mergers and other important industry-specific opportunities for your firm. In paying a retainer to an investment banker, you have hired, in essence, an expert partner to help your business grow.
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Instructions
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Research the banker in question to find out their field of expertise. The whole point of hiring this type of banker is that they know, in great detail, the field you are in and the opportunities available in the present market. Investment banking is field specific and, therefore, expertise in the field is a primary qualification for any banker you hire.
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Access the records at www.finra.com to see if the investment banker is licensed. The Financial Industry Regulatory Authority (FINRA) maintains records that show whether or not they have approved the activities of an investment banker. This includes the banker's record in following government regulations and following the law in general. If they are not licensed by FINRA, then avoid them.
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Ask for ideas up front. This is another way to test the expertise of a prospective banker. When you meet with the candidate, ask about some of his favorite methods of raising capital, funding ideas and possible merger opportunities. A good banker will have loads of knowledge off the top of his head and, once he researches in your area, these will just get better and more specific to your firm's situation. It is always a good idea to ask about the deals he has closed recently and those he has not closed. These are not prying questions at all, but legitimate research into the activities of this banker.
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Ask the candidate specifically who will be doing the searching for capital and other good things. Ask, more specifically, if she will be personally doing the "legwork" and, if not, then who. Be careful that a banker does not send your priorities to be dealt with by junior people who are not experts in the field. It might be better to deal with smaller firms with less opportunity to "delegate" your businesses' future.
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Inquire about a comprehensive buyer list or some other "master list" that lays out the specific people the firm deals with in your field. Having something like this is an excellent sign in most cases. It shows that the firm is active in your field and has a solid list of potential buyers that can be referenced at any time.
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