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10 Things That Drive CEOs Crazy About Investment Bankers


For many CEOS, their business is a huge part of their identity. Leaving it behind can be terrifying.

Investment bankers are often the first people CEOs meet on the market. As such, bankers play a huge role in shaping the CEO’s overall experience with M&A, good or bad.

We talked to CEOs about their biggest pet peeves and frustrations when working with bankers and M&A advisors. Here’s what to avoid as an intermediary.

1. Blockheaded prospecting strategies.

We’ve heard this story more than once: A banker calls up a CEO — maybe a cold call, maybe a follow up on a previous interaction. The CEO’s receptionist asks what the call is regarding. The banker says he or she is calling about a potential sale.

Boom: the rumor mill starts turning, employees start looking for new jobs, morale plummets.

We’ve also heard similar stories of bankers reaching out directly to sales people or other employees at an organization in an effort to get through to the C-suite. Either tactic can set in motion a chain of events that can have catastrophic consequences for the business — whether the CEO was even interested in selling or not — as well as ensure the owner never works with your firm. 

2. False barriers to entry.

Some CEOs have been told by bankers that they need to be “pre-approved” or “vetted” before being able to sign an engagement letter. This creates an atmosphere of exclusivity intended to manipulate business owners into signing with their firm. These sorts of psychological games are cruel tricks for CEOs who may already be intimidated by the complexity and emotional implications of M&A.

3. Excuses for their lack of references.

Most reputable firms should be more than willing to provide references for potential clients to speak with about their services. Some bankers, however, will make excuses as to why they can’t provide names and numbers, citing confidentiality or other concerns. This can particularly pose a problem when bankers who haven’t worked in a given industry or subsector claim experience, but won’t give up details. Again, CEOs who are unfamiliar with the M&A process might fall for this trap, leading them to a less-than-desirable choice.

4. False optimism.

The market is down, the business’ customer concentration is sky-high, there are tons of hidden liabilities — but the banker is confident that the CEO can get 10x EBITDA. He has case studies of similar companies’ trajectories, he has expert insight, he has smiles and rainbows. For a business owner, there’s nothing more frustrating than realizing a few weeks or months into an engagement that a banker has deluded you with unrealistic expectations in order to lure you into an engagement. (Smart CEOs will combat this by quietly taking meetings with other investment banks or consultants in their industry to see if they present similar data and trends.)

5. Hiding behind legalese.

A banker’s lawyer won’t let him or her get away with leaving out important clauses around fee structures, exclusivity, and other important aspects of an engagement. But that doesn’t mean that bankers always communicate that information clearly to potential clients. Sure, CEOs should take it upon themselves to read the contract carefully and hire a good lawyer to help them do so — but advisors should be transparent too. Trust is crucial when it comes to the advisor-CEO relationship.

6. Spilling the beans to competitors.

For a CEO, nothing is worse than being sold on a banker’s industry expertise — then realizing that he or she has inadvertently shopped a deal to the competition in a non-subtle, non-strategic manner. Such a move has the potential to upend industry dynamics, particularly in small markets or with influential companies. For bankers who might have industry experience but be new to a geographic region, for example, honesty in the best policy — the CEO in most cases will be more than happy to fill you in on competitor dynamics.

7. The MD-analyst bait and switch.

You put the CEO in a room with a few MDs, wine and dine him or her with their decades of experience and tombstones. Then, once the engagement letter is signed, the only person the CEO can get on the phone is a fresh-out-of-college analyst. Delegation is expected once a deal gets off the ground, but bankers should be transparent from the get-go about whom the CEO will be working with and how much access he or she will have to people from different levels of the firm.

8. Constant phone calls.

One of the biggest value propositions of hiring an advisor is that a CEO is better able to keep his or her eye on the business during a transaction. For a banker, that means striking a fine balance between keeping an owner in the loop, without inundating him or her with phone calls, emails, and to-dos. Respect for an owner’s time and for the priorities of running the business is crucial to a productive banker-CEO relationship.

9. Dropping the ball during due diligence.

A huge part of the banker’s job is to provide an outside perspective on the business, pointing out risks and helping CEOs maximize value before a sale. This also means preparing a business owner for the due diligence process and going through potential snags with a fine-tooth comb. When the advisor misses something that the capital provider catches, it makes everyone in the transaction look bad.

10. Prioritizing their own sale cycle over a closed deal.

Signing an engagement letter is a great outcome for an advisor, but it’s just the beginning for the CEO. No CEO is unhappier than one who sees his banker’s interest and responsiveness drop off once the agreement has been signed. Best-in-class advisors will grow and maintain a personal relationship with their clients that extends past the deal.

Honesty is the best way to build a trusting, productive relationship with your clients. Both before and after you’ve signed the engagement letter, try to add value in the form of industry expertise, valuation information, relationships in the space, and lessons learned from past experience.

Results don’t lie. Many CEOs embark on the M&A process skeptical of a banker’s fees and value-add. Proving them wrong in the form of NDAs, LOIs, and ultimately a deal close will ultimately be the best thing that could happen for your business. A happy client refers other clients, is willing to serve as a recommendation for future business, and will talk you up to others in the industry.

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