How do MM shops get mandated?
As the title says, I was wondering how MM shops source their sell-side M&A deals?
I might be missing an obvious answer, but their clients are not large enough to issue an RfP and they don't have the intel some of the lending banks or accountancy offices with MM M&A operations have.
So do deals only come in via the network of the senior partners or are there other ways in which these shops source their deals?
Thanks!
The network and relationships, especially within the financial sponsor community. The middle market is a different game all together. Potential clients (financial sponsors) want to understand sector and transaction experience, thoughts regarding valuation, and the universe of potential acquirers, including relationships with these parties. In this space, no one gives a damn about term loans and credit committees because financing has largely been commoditized, especially in the current rate environment. Conversations concerning staple financing might be more relevant, but no platform is running through the middle market winning mandates because of their trillion dollar balance sheet.
Thanks for this info! What about sell-side mandates for family-owned type businesses?
For a lot of family owned businesses and even just your typical entrepreneurs are provided introductions to bankers through their wealth management advisors. I'm in a MM shop and we have relationships with the BB, they'll send deals our way if they are too small for them or we'll get pulled in through their wealth management office.
As per the above but also what you typically find (in the UK at least) is that if they are not sponsor owned, but are of the size to get a bank involved, then they do often have someone who has done a deal in the past e.g a Chairman, NED etc.
Irrespective of the above, owners will still want a bake off-nobody who is successful in life would ever only meet one adviser e.g you wouldn’t only meet one estate agent if you were selling your house.
Having said all of that, an accountancy firm recently got a sell side mandate when the owners googled M&A adviser in their sector, and this firm came up first!!
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