Hey guys, I was wondering if someone could walk me through the steps from an MD getting a client to pitching, modeling, to getting paid etc. As far as I understand, it is something along these lines:
--MD finds company that wants to sell --MD sends info to analysts/associates to see if this is a company we want pursue selling (assume yes) --Analysts and associates make a pitch book to give to seller saying why we are the best --Seller accepts us --Analysts and Associates gather information from seller execs and financials to build a DCF/ any other model --Using that DCF model we get a valuation number --We pitch this company to Private Equity Firms/other companies --Sale takes place we get transaction Fees
If anyone could elaborate on, add steps and reorganize the above, I believe it would be a valuable learning experience for aspiring bankers.
Thanks
You are a bit misguided. An MD usually finds a business he wants to sell and spends time with the business and owners so he will have the ability to pitch for the sale of the business. MD does not send information to analysts and associates to get the OK to pursue selling.
Once you are invited to pitch usually the deal team(including an MD, VP, Associate and Analyst) will put together a pitch that highlights credentials, potential acquirers, positioning of the business, valuation and process/timeline. Usually the potential acquirers, relationships/access to acquirers, relevant experience (similar deals done) are the most important. Valuation is less so, because you are going to have several firms all give you similar ranges on value.
Once selected as the sell-side advisor the majority of your time is spent drafting memorandums, management presentations, setting up data rooms, any other process documents (logistics letters, bid letters,etc.) You may spend a bit of time putting together a basic operating model, depending on if the company already has one, but there is not a ton of modeling to do on the sell-side once you receive the mandate.
You get paid once the transaction closes. Sometimes, depending on the size of the deal you will receive an upfront retainer to show that the seller is serious about the transaction.
Basically MD spends time around the business and builds rapport w/ sr level decision makers. When the company decides it wants to do something (capital raise, M&A, etc) it will call on its banker(s) that it trusts.
That's why there are a lot of "staying in front of the client" pitches that are an absolute pain in the ass for the jr level guys bc they sometimes don't see a deal come out of it for a while, if ever.
Thanks a lot guys. Also, when does the Confidentiality Letter get signed?
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