Let's say you are selling your company with ~$10m in EBITDA, so probably falls into the realm of people mostly focused on LMM size deals.
What are the questions you would ask prior to engaging an investment bank? How would you run DD on them?
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Not an exhaustive list, but I'll kick it off with 3.
1. Track Record (Total deals closed and closing rate)
Essentially tells you if they have experience (meaning they know their stuff) and how often they actually go from engaging to closing. You don't want to have a process start and fail because they did a crap job of marketing your business.
2. Friendliness (Do they care)
Subjective. But do they care about you and your business? Are they interested in hearing your story? Small businesses are often different than big ones because they're usually family owned and operated. Although it's still about the numbers, it's not about the numbers. We've run processes where things get crappy because the CEO didn't tell his wife and kids he wanted to sell, or the CEO wants to reward key employees and ensure people don't get axed immediately.
3. Industry Expertise
Picking an advisor that has a track record in your industry, or one tangential to it is important. For example, when we get a transportation/logistics company we know exactly what value drivers to focus on, what to watch out for, and who some of the best strategic buyers might be. We already know the industry and the technology, so it makes things much easier. If you're in metals/mining, we'd be useless.
I il add to above
If I were selling my $10m EBITDA company, I'd ask the investment bank about their LMM experience, industry expertise, and deal team. For DD, I'd check their rep, past deals, and client references. 🏢🤝
Just call Harris Williams and call it a day.
I want to talk to the VP and associates likely running the deal, without the MD present. How much pushback will I get?
VP should be fine, will get push back on ASO
Make all the MD’s from competing banks line up and drop their pants. Whoever has the biggest balls gets the mandate.
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