I am on the buyside right now and we just gave a verbal agreement to buy a company and we are about to start the final due diligence phase. I was wondering, what would the sell-side investment bankers be while we are in the phase? It seems like the company would just send us information to analyze and bankers would really be of no use. Thoughts?
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Oh no. Good luck even talking to the company without going through the sell-side bankers, or at least having them on the call (assuming they're worth their salt).
The bankers job at this juncture is to make sure the management team doesn't say anything stupid or provide you with any information that is inaccurate. They're still quarterbacking the deal and coaching management, all the way until the deal closes.
As someone on the buyside, you'd be smart to remember who is paying their fee...
Captk is correct, all data will flow through the investment bankers. Phone conversations or site visits will be set up through the bankers. Sometimes the bankers even negotiate key points in the merger agreement.
~~~~~~~~~~~ CompBanker
Are you in involved in a formal process? Verbal agreement to buy a company? I assume you submitted a non-binding preliminary indication of interest? Have there been multiple rounds/multiple bidders? By final due diligence phase do you mean you are doing confirmatory due diligence and drafting the merger agreement? I've worked on deals where as noted above the only time you ever speak to management is through management meetings/tours/calls set up by the sell-side bankers but I have also worked on deals that were pre-negotiated outside of a formal sell-side process where bankers still played an integral role but we were not precluded from corresponding directly with management. Generally, the NDA that you sign at the beginning precludes you from speaking with management directly in a formal process and the sell-side bankers help facilitate the process so as to not distract management from running the company.
We are doing comfirmatory DD. What would an IB analyst due during the process? It seems like only senior bankers would be present during the meetings right?
The sell-side analyst would be working with the company to fulfill your DD requests. The information from the company's systems (accounting and the like) may not be in a format that is useful to your modeling process so he will act as the middle-man to format the raw data as well as likely keeping up with a contact log as the bank continues to keep other bidders on ice in case your shop doesn't close.
Nope. Just went through this. Working on buy-side, have been at our law firm's offices the better part of the last week. For the financial diligence, it's important to have an analyst/associate there to make sure their management plan numbers work, get info on options/RSUs/shares, cash balance, liquidity on investments, etc. etc. Plenty for buyside bankers of all levels to do during DD.
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