Mergers and Acquisitions: Why Should You Hire an Investment Banker?

Today someone asked me why a business owner should hire us to sell their business. Wouldn’t it be cheaper to just call up a few investors and sell their company on their own? Then they could avoid paying all of the fees that an I-banker is going to charge them. Yes, it may be cheaper to try to make the phone calls yourself; it would also be cheaper to be your own doctor. The problem is that you will not get the same results. Here are a few reasons hiring an investment banker would be beneficial:

Investment bankers have connections; we are continually in contact with private equity groups, angel investors, and companies that are looking to acquire trucking and logistics or other such businesses. With these connections we can work hard to bring many buyers to the table. This is essential to the selling process because it gives you the negotiating leverage and takes it away from the buyers. At the same time, if you are looking to acquire a business bankers can bring many companies to the table that are looking to sell which still leaves the leverage on your side. Either way, having the banker on your side adds value.

Bankers are familiar with the process; if you have never been through an M&A transaction having a banker to assist you through the process is very highly advisable.

Bankers are paid on a commission structure; when you hire a banker it is in their best interest to sell you business for the highest price possible. They are going to tell you a safe range your business will be able to sell, but they get paid a percentage of the deal so they are going to try to push the price up rather than sell the business as soon as possible.

Carl Christensen
Carl Christensen is a Principal with Deal Capital Partners, LLC and InvestmentBank.com. Before joining InvestmentBank.com Carl served as CFO for a $50M consumer events company. He is a former employee of both Goldman Sachs and Deloitte. He brings both breadth and depth to the M&A advisory team here at InvestmentBank.com.
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