We Don't Like Ignorant Clients

This may sound pompous, but let me explain. We love all clients. We also like educating clients as to the benefits of what we do. But, after we do, we want our clients to be experts. Nothing is worse than someone who does something just because they think it is a good idea. I’m a big advocate of not doing something without 1) a real reason for doing so other than others have done it in the past with some success and 2) education as to the true process, risks and costs involved. We’ll be patient with you, but we hope that after we’re done with you, you have enough understanding to be effective, but not enough braggadocio to think you can outsmart the law. The only thing worse than an ignorant public company owner is a nefarious one.

Ignorance Is Not Bliss

It’s unfortunate that this industry is filled with crooks. Some crooks are bona-fide, while some players were slapped by the SEC as an “example.” Nonetheless, care should be exercised and wisdom actively sought so as to avoid the ignorance trap. We’re the regular beneficiary of a new client who was either told something completely out in left field to sell them something or they were actually sold something that had little value for a criminal price or they were sold something that had value at a criminal price. It constrains our potential clients when they come to us after having already spent six figures on virtually nothing, only to find they have to start from scratch. The process is always cheaper than 90% of operators in the market make it out to be.

The Problem With Expert Crooks

Even worse than the occasional ignoramus is the expert feigning ignorance who’s trying to get either something for free or screw some investors out of their hard-earned cash. It’s this man’s opinion that rarely is there a true “expert” that willfully breaks the law. A true expert not only maintains professionalism, but also maintains some humility in the fact that most crooks get caught and that monetary reward, regardless of how promising, isn’t worth the sacrifice of integrity (now I’m really getting pompous).

Again, let me be clear. We love our clients, but by the time they’re done being our clients, we hope they’re no longer ignorant to the benefits and risks of getting their company publicly traded.

Why Education Is Central to Good Capital Markets Advisory

The capital markets ecosystem rewards participants who understand what they are doing and why. Whether a company is pursuing a reverse merger, a direct listing, or a traditional IPO, the process involves regulatory filings, disclosure obligations, ongoing reporting requirements, and a host of third-party professionals — securities counsel, auditors, transfer agents, market makers — each of whom plays a distinct role. Clients who do not understand these roles cannot meaningfully evaluate whether the work is being done properly or at a fair price.

This is not an academic concern. The gap between an informed client and an uninformed one is often the difference between a clean transaction and one that creates lasting legal and reputational exposure. An educated client asks the right questions, pushes back on inflated fees, and avoids structures that may look attractive in the short term but create regulatory problems later.

For those looking to develop a working knowledge of how capital markets transactions are structured, the investment banking guide is a useful starting point. It covers the core mechanics of raising capital, selling a business, and understanding how advisors are compensated — the foundation every client should have before engaging any advisor.

Red Flags to Watch for When Evaluating Advisors

Not every bad actor in the capital markets space is a deliberate criminal. Some are simply underprepared, conflicted, or operating outside their area of competence. A few warning signs that should prompt deeper scrutiny:

• Vague or unusually large upfront fees — Legitimate advisors are transparent about their fee structures. Requests for large retainers before meaningful work begins, especially when not tied to a clear deliverable schedule, deserve scrutiny.
• Guaranteed outcomes — No reputable advisor can guarantee a specific valuation, a specific investor outcome, or a specific timeline for going public. Any representation to the contrary should be treated as a serious red flag.
• Pressure to move quickly — Legitimate transactions take time. Artificial urgency is often used to prevent clients from doing independent research or seeking a second opinion.
• Resistance to transparency — Advisors who are reluctant to explain their process, introduce their team, or provide references from prior clients are not behaving the way professionals should.

The best protection against these risks is preparation. Teams that understand the fundamentals of equity financing and the mechanics of capital raises are far less vulnerable to being misled. Understanding what “normal” looks like makes it much easier to spot what isn’t.

The Relationship Between Client Education and Transaction Outcomes

Experienced advisors will tell you that the most successful transactions — those that close on favorable terms without post-closing disputes — almost always involve principals who were engaged and informed throughout the process. These clients understood the trade-offs in the deal structure, asked good questions during diligence, and could explain the rationale for each material term in the definitive agreement.

That level of engagement does not happen by accident. It is the product of deliberate education — reading, asking questions, and refusing to accept “trust me” as an answer to a substantive question. For those thinking about their own capital markets or M&A transaction, our transaction preparation process is designed to build exactly that kind of informed readiness.

Frequently Asked Questions

How much should I expect to pay in fees for a legitimate capital markets transaction?

Fee structures vary by transaction type, size, and the scope of services provided. What matters most is that fees are disclosed upfront, tied to clear deliverables, and benchmarked against market norms. Clients who understand how advisors are compensated — whether through retainers, success fees, or equity — are better positioned to evaluate whether they are being treated fairly.

What should I know before engaging a capital markets advisor?

At a minimum, you should understand the general structure of the transaction you are pursuing, the regulatory framework that governs it, and the roles of each professional involved. You should also have a clear sense of your own objectives — whether that is maximizing proceeds, finding a strategic partner, maintaining operational control, or some combination. Advisors who understand your priorities are better equipped to serve them.

Is it reasonable to get a second opinion on deal terms or advisory fees?

Absolutely. Seeking a second opinion is a sign of sophistication, not distrust. In complex transactions involving significant capital, independent verification of deal terms, valuation assumptions, and fee arrangements is standard practice for informed clients. Any advisor who discourages a second opinion is not acting in your best interest.