Checklist for Hiring an Investment Banker
Before you begin your search for an investment banker, determine exactly what you need. Company management often settles for what seems like the easier path, which may be selling the company, seeking funding or an acquisition when a reorganization and debt restructuring will solve the problem. Present your company's situation to several investment bankers and analyze their suggestions before you make any decisions. This will assist your planning process and help you to discover the true value of each banker and which works best with your company.
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Company Reputation
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Smaller companies are unlikely to meet the size requirements of the big national investment banking firms, but regional firms can present greater value. Certain firms develop excellent reputations in certain industries or for specific types of projects. Call your industry trade associations and local professional service providers for recommendations of investment bankers that have performed well for enterprises of your size and type. Start your selection process by talking with as many of these recommended firms as possible.
Performance
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The most important information you can obtain about the investment bankers you are considering is their completion ratios, or performance versus promises. Many investment bankers will promise whatever it takes to get you to sign their contracts, but when it comes to actually delivering on their promises, all you get is excuses. If your investment banker promises a deal done in 30 days but fails to deliver, it is probably in your best interest to hire another banker.
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Client Recommendations
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Don't be shy about asking for client references and examples of past projects. Take the time to call their references and ask questions. Look for information on how dependable the firms are regarding their estimations of the time it will take to complete deals, cost effectiveness, professional skill levels and responsiveness to client questions. Select for performance over pleasing personality.
Contract Terms
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Bring in a good attorney to review the investment banking contract. If it does not obligate the banker to a stated performance, negotiate the inclusion of a performance benchmark and easy contract termination if the benchmark is not met. Compare contracts and costs for the firms you are considering and consult with your attorney and accountant regarding the cost of the banker's services. It should be in line with industry standards, but a reliable performer is probably worth extra money.
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References
- Photo Credit Man in sunglasses with dollars image by Pavel Losevsky from Fotolia.com
