Why do PE firms hire buy-side advisors?
Apart from acquisition financing, why do PE firms hire buy-side advisors? Might be a dumb question but a lot of these people (PE) are former Investment Bankers; you would think they know how to do a transaction without the need for outside opinions/advice. What is typically the buy-side advisors role to a sponsor?
I've worked a couple buy sides with top PE firms and there's usually a couple of reasons.
First, they're looking for intel. While top PE firms are obviously in the market a lot, they don't understand the markets like investment bankers do. If they're a prospective buyer in a process, they're going to want to hire someone that knows all of the other possible buyers and what they may be thinking. They also regularly ask their banker advisors what they're hearing in the market. This is extremely valuable intel for obvious reasons.
Second, industry expertise. PE firms might be great at doing deals but they look at so many different businesses in so many different industries that it can help to have an "industry expert" on your side. Coverage bankers can help identify bolt-on / merger opportunities and may even have connections to facilitate the process, they have a better understanding than the sponsor on who should be comps and how they should be viewed, they have better views on possible buyers at exit and to an extent they can help understand the cash flow profile relative to the industry.
Third, relationships. Buy side bankers are also sell side bankers, and sponsors want to maintain good relationships with them to facilitate deal flow.
It's typically a combination of the three.