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Business Owners

4 Ways to Meet Quality Investment Bankers


So you’ve decided to sell your company, or perhaps it’s time to explore alternative financing sources for your business. You might be contemplating a transaction now, over the next 6-12 months, or even the next three years. Regardless of your time horizon for a transaction, in all likelihood, you’ll need to retain the services of an investment bank or M&A advisory firm to ultimately run your process and achieve the best possible outcome for your business.

In speaking with hundreds of CEOs and owner/operators, Axial has found that most companies either lack the resources to identify the most qualified advisor to represent them, or evaluate a limited number of options from among the referrals they receive via their immediate network. While many of these CEOs and operators are content to choose an advisor from a handful of referrals, they often do so without understanding the difference in value added by a great advisor vs. a good advisor. After all, when you’re selling a multimillion dollar business, even the slightest adjustment to your valuation can be a seven- or eight-figure difference for you.

We’ll explore in a later post how to evaluate which advisor is most qualified to represent you, but the only way to ensure you’re selecting from among the best is to give yourself as many options as possible. So let’s first review the different methods of identifying potential investment bankers or M&A advisors to maximize the pool of candidates for your business:

Inbound Inquiries

It’s no secret that most businesses regularly receive inbound phone calls, emails, letters, or even faxes from investment bankers and M&A advisors looking to represent them in a transaction. While you might be tempted to ignore or discard these inquiries, particularly if you hadn’t been actively considering any kind of transaction, you’ll want to save and collect these inquiries for future reference. Indeed, these advisors are often targeting you because your company resembles the types of businesses that they’ve successfully financed or sold in the past. Archiving these inquiries is one way to create a safety net in the event you’re confronted with an immediate need to access the private capital markets. It can be as simple as labeling and archiving these emails in your inbox or saving the direct mail you’ve received in a folder. Basic CRMs and tools like Axial Contacts offer a free and easy way to manage inbound inquiries.

Referrals from Your Network

A common source of potential bankers or advisors will be your immediate network of professional and personal relationships. Many lawyers, accountants, or even commercial bankers will have relationships with local and regional advisors they may refer you to. If you know CEOs and executives at other companies, perhaps through organizations like the YPO/WPO, Entrepreneurs’ Organization, or Vistage, they can also be a great channel for referrals. For CEOs and operators who already have relationships with several advisors or even investment firms, an oft-overlooked approach is to ask these connections for introductions to other deal professionals they know. Even if these particular firms aren’t a great fit for your business, you’ll find they’re usually more than happy to introduce you to someone who might be.

Outbound Research

Inbound inquiries and referrals will help you generate warm conversations, but you’ll also want to supplement these channels with your own outbound research and outreach.

A great way to get visibility into the most active bankers and advisors are league tables or leaderboards. The Financial Times and the Wall Street Journal regularly rank investment banks by metrics like deal volume and transaction revenues, and Axial publishes a regular list of the most recommended middle-market investment banks. These rankings should help you understand who’s taking on new clients and who’s actually closing deals.

Of course, there are also a number of “old fashioned” tactics for finding and researching banks: Google searches, or scouring the news for recent transactions. You’ll find that many banks will announce closed deals via press releases, which helps them market their success and gives you a way to identify who’s active in your industry. Rather than doing generic searches for “investment bankers in North Carolina,” consider using Google Alerts, which allows you to create a “saved search” for keywords like “aerospace M&A” or “consumer products investment bankers.” These saved searches will surface transaction news in real-time as completed deals are announced. Online publications like Fortune’s Term Sheet and peHUB Wire are also great resources you can subscribe to for daily updates and breaking news on M&A and other private capital transactions.

Networks 2.0

Perhaps the most sophisticated and comprehensive method for finding and researching investment banks are “networks 2.0,” or online platforms that help professionals manage and expand their existing networks.

While not quite a “network” in the traditional sense, Quora has aggregated a robust and sophisticated community of experts that may offer recommendations on the best investment bankers for software companies, among a plethora of other topics. LinkedIn, of course, offers yet another way to tap into your existing network – particularly 2nd and 3rd degree connections – who may be able to make introductions or recommendations for folks you may be interested in talking to. There are also thousands of LinkedIn groups where communities of CEOs and private company executives LinkedIn offers a saved search functionality much like Google based on updates members make to their profiles. Finally, Axial has focused on building a network and tools exclusively focused on professionals who operate, advise, finance, or acquire private companies. Our software for private company entrepreneurs recommends the most qualified bankers for each business based on bankers’ transaction experience, forward-looking client criteria, and Axial Activity Index (a score representing their transaction activity on Axial).

Online networks offer an inherent advantage over traditional sources of information like databases for a number of reasons, so be sure to supplement your traditional networking and outbound research efforts with memberships on LinkedIn and Axial.

No One Way About It

For any private company owner or operator who is serious about finding the most qualified and trusted advisor for their business, no given method described here should be pursued exclusively. For what ultimately may be a seven- or eight-figure investment in hiring a banker to make sure you maximize the value of your business in a transaction, it’s well worth the time spent to make sure you’ve exhausted all your options.

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