Why does a company looking to IPO or issue more debt prefer one group or advisory shop to underwrite/advise over another? It seems like all of them do the job equally well, with no real reason to choose the one that doesn't have the lowest fees apart from relationships.
Can some finance hardo who passed all 3 levels of the CFA in one try explain to me?
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From an equity perspective, the actual go-public is one piece of the puzzle. As an issuer, you want groups who will support you in the long term, tell the story, provide liquidity etc. Think of it almost as hiring "evangelists" who will champion the story.
So apart from transaction creds and relationships, things like strength/depth of research coverage is super important. Do they cover similar companies, i.e., do they know the space. How good is the research, i.e., how well can they tell our story, how many names does the analyst cover i.e., will we get enough attention/coverage or the perfunctory quarterly/annual report etc.
Strength of the sales desk is also super important. As an issuer, you want long-termish institutional investors who will come in on follow-ons and support growth. You'll want to think about what accounts the group is bringing to the table, who they've put into similar deals that sort of thing. Targeting the right accounts is key, super important to find investors who understand the industry and the story. This factors into pricing/valuation as well.
Lastly trading. You'll want groups who trade the stock and provide liquidity.
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