Business Financing and the Capital Structure

Business & Finance
Tutor: None Selected Time limit: 1 Day

  1. Summarize the advice that you would give the client on selecting an investment banker to assist the business in raising this capital.
Jun 13th, 2015

Thank you for the opportunity to help you with your question!

Here are five important things to look for when hiring an investment banker:

1. Mutual Trust : You are putting your life’s work into the hands of the investment banker you select. Mutual trust is critical. The banker must trust that you will be open, honest and forthright about your goals, your company and its operations. You must be able to trust your banker to wisely manage and protect your interest and to provide you with counsel and advice.

2. Experience As in any industry, experience is important. Selling or acquiring businesses or raising capital is not a simple process. It takes time to establish a network of contacts, learn how to properly work with buyers and sellers, execute a deal, and maximize values. Here are a few questions to ask of your banker-to-be:

·  How many deals have you successfully closed?

·  What was the value of those deals?

·  Have you managed a deal from inception to closing?

·  Have you ever owned a business yourself?

·  How long have you been an investment banker?

3. Chemistry: Hiring an investment banker or firm to sell your business or manage a major financial deal for your company is not unlike getting married. Personal chemistry is important. Your bankers should understand both your personal and financial goals, and you should be comfortable listening to their advice and guidance. This is one of the most important decisions you will ever make in your business life. Make sure you have the right fit from the start.

4. Support Team: An experienced banker can do a lot by themselves. However, it takes a strong, professional team to create a dynamic marketing program that maximizes the value of your company and delivers world-class results. Your banker should be part of a team that includes market research, marketing, public relations, financial analysis, legal and pricing. Plus, working with a larger, established firm provides your banker access to other experienced bankers who can provide additional assistance if needed.

5. Tenacity:  Major financial deals are not completed overnight. There will always be issues to be addressed along the way. Some will be simple, some complex and demanding. You want an investment banker by your side who understands your goals, is focused on achieving them, and refuses to give up. They should always have a backup plan, and be willing to do whatever it takes to successfully close the deal.

Investment bankers work in a high risk, high reward industry. Many do not get paid until the deal closes. They are dedicated professionals who, unlike those portrayed in the movies, are not driven by greed, but by the simple desire to assist business owners and help them realize their dreams.

If you are thinking about selling your business, make sure you look for an experienced investment banker you can trust, who has a proven support team, the tenacity to get the deal done--and also someone you enjoy working with. It will make your journey through the process easier and ultimately more profitable.

Please let me know if you need any clarification. I'm always happy to answer your questions.
Jun 13th, 2015

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Jun 13th, 2015
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