How to pick the right bank to run M&A sale process?

My firm is looking to sell a mid-market asset (~$0.7-1b), and we begin a beauty parade next week. We are a global firm, and frankly haven't done a ton of US transactions. We have ~4-5 banks (a mix of BB/EB/MM IBs) in mind. As with any seller, when engaging a sell-side advisor, the number one priority is customer service and responsiveness of the team. Despite the size of the company, the top banks really want to do this deal given the brand of the company.

At the same time, we have a very clear idea on how we want the process to run, and definitely don't need to rely on the bank for financial advisory per se. However, we do want to make sure that whichever bank running the deal is not currently operating over capacity, and that senior bankers (MD/D) will be very involved through out the process (not pawning off the deal to VPs and juniors to do the selling/communication with bidders, after winning mandate).

I guess in other do I gauge each bank's capacity, and whether the MD(s) will be invested in our transaction and be involved through out the process? The last thing we want is the MD disappearing, and it's just the juniors running the process.

Am I better off going with a EB/MM bank that I know will definitely value this transaction, as opposed to taking a risk with the BBs?

Any color here would be helpful.

Comments (60)

  • Associate 3 in IB-M&A
May 19, 2022 - 1:01pm

$700m-$1B isn't as mid market as you think, BBs do those deals all the time. It's not marquee for them, sure, but a fee is a fee... especially these days with IB transactions softening YoY.

Perk of a BB is you have a really large team to work with (coverage, M&A, likely multiple MDs/Ds covering you), and they have tons of resources all over the world to help you. You may actually get some more involvement from seniors there, as EBs run much leaner teams and juniors are expected to take on higher responsibilities.

From someone on the other side of it... take a look at the materials prepared. Does the MD have 60 pages of random analysis that isn't helpful, and they kept referring to random pages in the appendix whenever you asked a question, or 20 pages of well-thought out insight, and they were able to answer your questions off the bat even if it wasn't with a specific number? The best and most involved MDs I know don't have to rely on pages and pages of random crap, which means a multiple of less work for their juniors too.

Good part of it is also just going with your gut. Is this guy just a great salesman, or does he actually take the time to explain the process and make sure we are happy with the team? Did he just throw the group head's name on there saying you have access to everyone, or is the group head actually on the meeting answering questions? 

  • Intern in PE - Other
May 19, 2022 - 1:26pm

Feel free to PM me - looking to bring new clients to my firm.

  • Analyst 1 in IB - Cov
May 20, 2022 - 7:30pm

This forum will never cease to amaze me. You're anon so he can't even PM you and then are asking him to PM you such that HE can bring YOU business. 

May 19, 2022 - 10:09pm
Premia, what's your opinion? Comment below:

Thanks, just replied. For some reason I didn't get a notification.

  • Intern in CorpFin
May 19, 2022 - 1:54pm

I work at a MM firm and we run circles around most bulge brackets in terms of execution in our space. This is because of the relationships we have in the space and execution capabilities of the MDs I work with frequently. Unless you need the full capabilities of a BB there is a lot of downside of having so many cooks in the kitchen advising on a transaction. Go with your gut and go with the people who will be good honest advisors to you, rather than tell you what you want to hear.

May 19, 2022 - 2:00pm
reformed, what's your opinion? Comment below:

Think this is silly/feels like it's a troll.

This isn't 2021 where a company risks being the 5th IPO in the industry that a given team are currently in the market for.

Given current dealflow, no one is going to blow off a $1bn sell side. 

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  • Director in PE - Other
May 19, 2022 - 3:32pm

You completely missed the question...I am looking for tips to select the best bank for our process, and how to gauge whether the MDs will be personally involved after we engage them. (Ie. Practical ways to gauge quality of customer service when every MD/Head is going to be selling us hard)

Obviously, it's a terrible year and any bank that we speak to won't be blowing it I said, it's a prized asset. Any bank will want to work on our transaction. That is not my point or question though...

May 20, 2022 - 11:32am
Your boy Blue, what's your opinion? Comment below:

The only advice that hasn't been mentioned is how to gauge senior banker commitment... Worst case scenario is that the banker with the most relevant experience woos you during the pitch but steps back once the process hits a snag or when you really need them as an advocate (and their relationships). I would ask them directly how many mandates they are working on currently and what are the most recent closed deals that they were heavily involved with. Check the tombstones for their group to see if they are closing a deal a year or a deal a month (that specific banker, not the group). Needless to say, if they're closing ~6 M&A deals a year, they prioritize their involvement across those deals over the success of your individual deal (assuming you're not their #1 deal). If you go with a MM/EB that is M&A focused, the above is a good way to tell if the guy you meet at the pitch is actually going to attend management presentations or if some "rock star VP" who said ~10 words during the pitch is going to support the process. 

Also, nothing gets a senior bankers attention like a client who can provide multiple fee opportunities in the future. Feel like small PE firms get burned when they have a very high quality asset and go with a big name bank... The big name bank knows they won't have a $300M+ M&A deal in every fund so they get second rate treatment if the process gets tough. If most of your activity is in Europe, probably a good idea to go through one of your existing relationships with a strong US presence so there's internal pressure to perform (excluding the accounting firms). 

Got stung on this last year. Think you'll fair better given the current market but best of luck regardless. 


  • 11
May 20, 2022 - 7:16pm
rf949, what's your opinion? Comment below:

This may be a stupid question - but can you ask the banks involved in the bake-off to bring a slide detailing roles/responsibilities among their team? 

For instance, ask them commit in writing as to who, specifically, will be communicating with potential buyers

No guarantee they will follow through, but it would be much better for them to commit in writing to roles/responsibilities versus just saying it during a meeting which makes it harder to pin them down on it later

May 19, 2022 - 2:03pm
rabbit, what's your opinion? Comment below:

I would read into the pitching a bit. Nothing you haven't heard already I'm sure, some will put real thought and effort into understanding and positioning the business as well as the buyer universe who would be the right fit. Others will throw in real boilerplate shit.

Caveat this with I don't know the specifics of the business, but for example, I personally would be a bit wary of any firms pushing a broad process in this market and showing pages and pages of buyers. Unless of course it's that kind of high quality asset. Someone who put real time and effort into thinking about the key selling points of the business and a targeted list of buyers that marry well with would resonate better with me. Similarly, firms that set realistic value expectations that are well reasoned versus slapping on comps / precedents / DCF ranges ("market is shit" etc.) I would listen more closely to.

Relationship history is obviously important here. Are there firms that cover your fund that have groups in the US? They have skin in the game so you'll naturally get more attention there, or at least have direct channels to the senior level. Also, if it's helpful, I'll always give push that much harder for relationships where there is more fee potential down the line. 

I've also had prospects reach out to past clients. This happens more at the board level. 

  • Analyst 2 in IB-M&A
May 19, 2022 - 2:48pm

Is it not common to ask for references? My bank always has MD references in a pitch, and talking to recent clients is by far the best way to see how involved the MD is

  • Analyst 1 in IB - Gen
May 19, 2022 - 9:04pm

I would go with J.P Morgan on this one. They easily have the most black, latino and lgbt employees in investment banking. That's gotta count for something right babe?

  • VP in IB - Cov
May 19, 2022 - 9:17pm

Probably few simples ways

- Deal lead MD needs to be coverage focused guy. If he hands off to M&A guy it's just running process. You want someone who gets the industry / buyer dynamics. This is why BB M&A model fails

- Boutiques are fine but don't fall for the very old MDs. They are smart, know lot of people but day to day won't be involved. You want someone young, hungry but not too young. So probably someone who has been MD for 5-7 years. Exception here is a Moelis guy I know but he isn't doing industrials 

- Avoid the guys who are more capital market / buy side M&A focused. Some bulge brackets are like that 

- Track record of selling similar business is critical but tbh sometimes they do get lazy and just copy over old CIMs. But it's better than not knowing anything 

- Capacity is hard to judge. You just gotta make noise to get more bodies or demand they get on call. Many cases people don't sign EL right away. This is a good way to hold hostage / accountable 

- Before bake off, you are going to have a pre call to have bankers ask questions? See if the MD digs in or let associate / VP handle

  • Analyst 1 in IB - Cov
May 22, 2022 - 2:37am
  • Associate 1 in PE - Other
May 28, 2022 - 5:09pm

I'd worked at a firm that was set up like a BB, but was MM focused. Sitting on M&A team, we'd typically get brought in for important pitches or post-mandate. Our biggest duties were building model and related slides and then doing all the process work (buyer log, VDR, DDQ etc.). Coverage essentially covers the rest of the CIM and helps on more industry-related diligence requests. 

coverage MD typically has priority in making important decisions like bids, M&A MD just mainly comments on structuring and value of proposals 

  • Associate 3 in IB - Cov
May 20, 2022 - 6:12pm

This is a bit of a mischaracterization of the bulge bracket model. The coverage MD works in tandem with M&A. Coverage will speak to industry dynamics, competitors, valuation, etc., M&A will speak to structuring, timing, process, shareholder considerations, governance, tax implications, etc., 

Also, by the time you get to MD, bankers in M&A are focused on a single industry and usually within a specific vertical within that industry, assuming there is enough coverage to go around. 

Have never seen someone from M&A lead a buyer call without someone from coverage on the line.

  • Analyst 1 in IB - Cov
May 22, 2022 - 12:19pm

>Avoid the guys who are more capital market / buy side M&A focused. Some bulge brackets are like that 

damn you're really gonna flatline barclays chances like that?

  • Incoming Analyst in IB-M&A
May 19, 2022 - 9:52pm

I was just an intern so what do I know…

… But based on my experience go with a bank that's not just buttering you up and giving unrealistic expectations. Sometimes they'll say what they think you want to hear rather than maybe what is the right thing to say, so keep that in mind. Differentiate between someone who's just saying yes to everything you say versus someone who's putting thought into it.

Also, I think it's still relatively easy to show and act like the senior MDs are gonna be super involved, only for the MDs to hand it off to their subordinates until the next client call. There can be a lot of smokes and mirrors and I think the best way to go about it is just to talk to previous clients if you have any connections.

Finally, try to push them on the numbers a bit and see how much the MD actually knows why a certain number is a certain way versus another.

Anyways, thanks for the thread, it's been really interesting seeing how some of these people are selling their banks and also how someone makes a decision as to who to pick.

  • Executive Director in PE - Other
May 19, 2022 - 11:40pm

What's weird about it? Pretty sure it's helpful for IB guys hoping to eventually make it to the senior ranks and learn how to win a deal, Buyside guys who want to optimize for their processes, and business owners who are buying/selling a business that is very important to them.

You realize people don't sell businesses every day right? So, you can be working on the Buyside and still have very few exit process experiences. There are horror stories of the low quality of service received post signing EL vs perceived quality of service to be received during RFP stage.

Unless you really need more how a non-target can network their way into IB, Top MM vs low BB, or where to find modelling prep threads...

May 19, 2022 - 10:04pm
MantisTobogganMD, what's your opinion? Comment below:

A good heuristic I like is seeing who's willing to meet face to face first, preferably on their own volition. On one hand, it demonstrates dedication, and on the other (and more importantly) the in person read always seems to tell a lot. Any MD who's too "salesy" I typically see to be the ones to go awol. They become too interested in just checking the box they've brought a deal to the table, and then when things go awry, they can't manage the process. I typically don't put a lot of stake in track records because you don't know what the actual process is like. I'm in a similar role as you it looks like, but also had the displeasure of working for an MD like that early on and learned a lot of what not to do.

EDIT: Also had an experience earlier in PE going with a bb and MD who allegedly had broad sector coverage, seemed legit and even took a lower fee to get the business. They bombed hard, and we ended up having to do almost all of the transactional work in house. In hindsight, the desperation was probably a red flag, but it didn't take long for them to disappear. Sometimes going with a smaller group with someone who's confident and has something to prove, even if they don't necessarily have the credentials, can be a good thing. They're hungrier.

  • VP in IB - Cov
May 20, 2022 - 9:23am

Couple items that may be repetitive to what others have said:

- Call up their references they highlight but also do some back channeling and connect with the ones they didn't list (but you know they did a deal with - PE side)

- Excessively long pitch decks with tons of analysis / scenarios are a red flag. If they are involved / know their space - they don't need this

- While the MD is ultimately the most important, don't forget to run reference checks on the SVP / Director and VP on the deal. They'll be running the day-to-day process and a weak VP can really derail a process

  • Associate 2 in IB-M&A
May 20, 2022 - 8:34pm

I think there's some good advice on this thread already so won't repeat it, but my personal opinion is that your focus on seniors vs. juniors and day to day operations may not be what will get you the absolute value-maximizing sale process. I totally get what you're trying to solve for - capacity and senior involvement should equal maximized value - but I can tell you there are other factors at play. 

For context, I work at one of the EBs and have run a number of these cross-border sellsides. 

Here's your problem - you're coming to market that is rife with uncertainty and my sense is your bid-ask spread is going to be high. In this market, successful sellsides will be bought not sold. What does that mean? You need to find those buyers who want your asset and DD will be about a reason not to buy, not those who will bid whatever to get thru IoIs then need to use DD to convince themselves to buy.

Hence, your buyer list, and your approach is going to be absolutely critical. You are going to need to know that "Sixth Street will never do this deal". Your internal team is going to be doing a LOT of work facilitating due diligence, and it will be a massive waste of time if you don't have the right buyers in the 2nd round, especially when the market is looking worse by the day. 

So what does that mean for your bake-off? More than anything, you need the senior banker + team who is in the flow and has a lot of relevant experience in the subvertical. In my opinion it really doesn't matter that much how involved a senior will be in the blocking and tackling of diligence, what matters is a senior who knows and can place calls not to just someone at Blackstone, but the exact MD who wants this deal and is interested in your subvertical (deals get turned down by megafunds when the wrong person is contacted). Who realizes that all Apollo ever is gonna do is offer you some stupid instrument or not at all what you actually want out of this transaction. And who knows that mid-size strategic in your space with a new chief of strategy who will actually give you credit for synergies. 

So how can you tell? Hear them out on how they'd position you and see if they know what they are talking about when it comes to buyers - you know your space better than any banker, so you should be able to probe that knowledge. If they mention a buyer you would never consider, push them on it - if it's an answer like I gave above, that's great, if it's "well they could really benefit..." or something else less-than-thoughtful, that's a red flag. 

Good luck - I'm sure you'll do great. Let me know if any questions  - happy to chat. 

  • Executive Director in PE - Other
May 21, 2022 - 8:06am

I agree and disagree. See your point though. I also did banking as an analyst, at two different shops, so am well aware of how it works. Understand the blocking and tackling of DD process, as I have done it myself. The senior (if good) will be one in the flow, and understand how the Buyside is thinking about acquisitions in this market, not the analyst who has been around for 1.5 years. The asset sells itself, so in our case, not much positioning nor financial advisory is needed for this transaction. Appreciate your comment though.

  • Analyst 1 in IB-M&A
May 20, 2022 - 10:12pm

As someone working with a shitty vp who adds work/derails the process, i'd say it is almost as crucial to diligence this person as with the MD. The vp will be responsible for creation of materials and hitting deadlines. If they can't get their head out of their ass and focus on the big picture, I promise you will not be in market as soon as you'd like to be and will run a process that will turn off a lot of buyers.

May 21, 2022 - 6:02am
CompBanker, what's your opinion? Comment below:

Lot's of good answers above, but there is only one surefire way to ensure that the MD is involved... write it into the engagement letter. Put right into the letter that either the D or MD will participate on all buyer calls and be present at all buyer meetings. I've done this before and it really does test the commitment to the engagement. If the MD agrees but fails to follow through on the commitment, you have an argument to reduce the fee or even terminate the engagement if things don't go well. 

Mentorship with CompBanker:

  • 4
May 21, 2022 - 1:57pm
chairman xi, what's your opinion? Comment below:

1. If you don't already have relationships and need to run a beauty contest you are already behind the curve.  Better to have an existing relationship with a bank that understands your business.  Considering you are a PE firm that's concerning you need to blast out an RFI.  Do you not know bankers you already trust? 

2. The number one thing that determines whether a sell side process goes well is if the actual company being sold has their shit together.  Good management team, all materials ready for detailed due diligence etc.   The 29 year old vp banker running a good process or not should not determine it.  Simply put, good companies garner interest.  Is your CFO ready to answer questions about historical performance and why your projections are sound?

3.  Anyone can run a sell process to be honest.  Processes fail due to bad companies that are unprepared or companies that are delusional to what they are worth.

4.  The only thing that you should care about the banks is does that MD know all the strategic and sponsor contacts on a first name basis (golfs with them, wife swaps with them etc).  Any md that needs his team to cold email 100 firms a cim is one you don't want to touch with a ten foot  pole.

 Summary:  the only value an investment bank is to you is their rolodex and "ears on the ground".  Nothing more.   Don't listen to everyone here saying its all about how well the VP can run a process(thats nonsense and not big picture thinking)

  • 6
  • 2
May 21, 2022 - 5:12pm
CompBanker, what's your opinion? Comment below:

Hmmm, I disagree a fair amount with this. Some thoughts:

1 - The OP stated that they already have 4-5 banks lined up to pitch. The question posed wasn't about which banks to invite to pitch, it was what he could ask them or how he could incentivize the senior bankers to be involved in all aspects of the transaction.

2 - I mostly agree here. It makes a huge difference if the company is well prepared and can answer questions quickly / succinctly. 

3 - Yes and no. Positioning matters. A good banker learns the asset inside and out and is able to offer strong mitigating factors for why buyers shouldn't be worried about the risks they identify during DD. You cannot rely on the company to do this - your banker is your first line of defense. If everyone passes because the banker wasn't able to explain why a blip in historical earnings is a non-issue, then it doesn't matter how well prepared the company is - the sale will fail.

4 - See #3. I actually think #3 is more important than the MD knowing all the strategic and sponsor contacts. Private equity firms are in the business of buying companies. It doesn't matter if they get a call from the VP or the MD, they are going to explore the opportunity if they like the company/sector. Heck, most of the MM banks don't even place phone calls anymore - the junior members of the deal team just blast teasers out to hundreds of names on a buyers list.

Mentorship with CompBanker:

  • 7
  • Analyst 2 in IB - Cov
May 21, 2022 - 2:10pm

The fact this joke PE firm thinks "responsiveness" is the most important aspect already tells me they don't know what they are doing.

Can already tell this is a really crappy asset being put to market.

May 22, 2022 - 1:50am
jackdags, what's your opinion? Comment below:

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  • Associate 1 in PE - Other
May 28, 2022 - 5:14pm

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