When it comes to selling your business, the smart money has you choose an investment banker to get the deal done.
Why choose an investment banker, you ask?
Before I sold my business, I did a dry run with an interested company who wanted to buy my business.
With no investment banker, my buyout was 3.5 times EBITDA and a 7-figure offer.
Fast forward thirty months later, my buyout was 13 times EBITDA and a 9-figure offer.
How do you choose an investment banker?
Keep read to learn and prosper.
I reveal little-known strategies on how to choose an investment banker that gets the job done.
I’ve made the mistakes and have done the heavy-lifting, so you don’t have to.
And if you think you’re a superstar who is smart enough and experienced enough to sell your company on your own, go for it.
Your future buyer is counting on your arrogance to make mistakes.
Your loss is your future buyer’s gain. And you’ll lose a lot.
But know this.
All investment bankers are not equal. The wrong investment banker will have you wishing you did the deal on your own.
The right investment banker can unlock massive success and wealth.
What distinguishes the right investment banker from the wrong one?
Choose An Investment Banker Who Is A Game Changer And Life Maker
Life is a matter of choices, and every choice you make makes you. – John Maxwell
Choose an investment banker who is a game changer and life maker.
How does an investment banker do this?
When preparing to sell your company, it’s all about crafting your story.
Although your financials are important, they pale in comparison to your story.
Choose an investment banker who crafts your story according to each buyer.
A strategic buyer has different motivations compared to a financial buyer.
Your future buyer wants to hear about your upcoming growth and areas that you can’t do but the buyer can.
Choose an investment banker who crafts the right story tailored to a specific buyer. If done right, the buyer knows she must buy your company.
Your story highlights ‘must have’ elements of your business. Your future buyer doesn’t care about the ‘nice to have.’
An investment banker that’s a game changer and life maker understands this concept.
For my first offer, I didn’t have an investment banker. I didn’t know what I didn’t know, didn’t have the right story, and it showed.
Thirty months later, I choose an investment banker that changed the game. My story was tailored to the specific buyers, and it resonated.
When you choose an investment banker, find one that’s a game changer and life maker.
How do you know you have the right investment banker?
Choose An Investment Banker Who Is Obsessed (In Every Way)
Obsession is the rocket fuel of our creativity. – Jordan Ritter
Looking to maximize your wealth, success, and happiness on the sale of your business?
Choose an investment banker who is obsessed with both you and in getting the deal done.
We’ll talk more about this later, but it’s the investment banker and not the bank that’s important.
And when you choose an investment banker, know that no two are alike.
For optimal results your investment banker:
- takes a personal interest and ownership in both you and your deal
- is only hungry for the best outcome
- a quick learner
- doesn’t sleep and will work your deal on evenings and weekends
- is persistent and stays with you even when things are challenging
- treats negotiations with the buyers like a chess game and is several moves ahead
- has the energy and persistence to work your deal until it’s done
- doesn’t settle for any deal
Think back to when you first started your business. You were hungry, had a whatever-it-takes attitude, and did what you had to do.
Your investment banker should exhibit the same traits as you when you started.
Do you know the 9-key questions you must ask when you choose an investment banker?
Secure Your Future Through These 9-Key Questions
Remarkable leaders ask great questions. – Kevin Eikenberry
You’ve worked too hard and long on your company to choose an investment banker by reputation only.
Before you choose an investment banker, ensure you take the time to meet and ask questions.
Watch, observe, and take note of everything.
A quick story.
My first interaction with the investment banker was with his assistant. I called on a hot summer July morning and learned the investment banker was out on vacation.
I left a message figuring I would hear back in a week. Or two. Or three.
Afterall, its summer and vacations are all the rage.
To my surprise and delight, the investment banker phoned me back later that afternoon.
Why did the investment call me while on vacation?
The investment banker was curious about me and wanted to learn more.
High marks to the investment banker whose actions spoke volumes. The makings of a deal take place day or night, vacation or not.
Many phone calls and meetings followed.
The rest, as the saying goes, is history.
It took two years for me to find and select an investment banker.
Along the way, I developed questions that made the difference. And so should you.
Questions are everything.
Do you know the 9-key questions you must ask before you choose an investment banker?
9-Key Questions You Must Ask Before You Choose An Investment Banker
When you don’t know what you don’t know, questions are your salvation.
Ask the 9-key questions below as you decide on who to choose as an investment banker.
- What interests you about my company?
- What’s your opinion on my company value?
- Why do you believe you know my market and what deals have you closed in my market in the past 3 years?
- Name your top 5 relationships in my space and how this plays into you developing a buyer list?
- How does your fee structure work?
- What materials can you show me for previous offerings and deals?
- What should I select you over your competition?
- Tell me about three deals that didn’t happen and why didn’t they go through?
- Who is part of your deal team and how do they fit in the process?
Be prepared to answers questions yourself. Many questions.
Here’s two to start.
Have you asked yourself the only question to ask before selling your business?
Does your company run without you?
If you’d like to retire happy and rich, you better have the right answers to the last two questions.
Does Size Matter When You Choose An Investment Banker?
Size doesn’t matter. It’s all about the heart. – Bob Sanders
When you choose an investment banker, you’ll ask that age-old question, does size matter?
Do you choose a boutique firm focused on a specific industry?
Or do you choose a large and broad-based firm that has it all?
Be prepared to make trade-offs.
A boutique firm that specializes in your space brings significant advantages to you.
On the downside, the boutique firm may only have a few favorite buyers. And now your choices and the process has limits.
A large firm may have many buyers and choices, but are you only a means to an end?
To optimize your success, look beyond the size and name of the bank and look to the quality of individuals.
Also, consider company culture and remember that culture trumps strategy. All day. Every day.
Skip the large bank with a great reputation but mediocre talent.
Top quality talent trumps size and reputation.
In my case, I find the best of both worlds.
The investment banker I selected was top notch and happened to work out of a large bank. This large size of the bank was a bonus.
More important was the investment banker and deal team focusing on my industry. It was the same team that was the leader in the education industry.
If the same team were at a smaller bank, I would have gone with the team over the bank. All day. Every day.
You’re Deal Is Only As Strong And As Good As The Deal Team
A chain is no stronger than its weakest link, and life is after all a chain – William James
When you choose an investment banker, know that your deal is only as strong and as good as the deal team.
You can have an investment banker extraordinaire but fall short because of a weak team.
When you choose an investment banker, watch out for the bait-and-switch.
Avoid an all-star investment banker who has a deal team of juniors.
It happens more than you think and more than it should.
When interviewing investment bankers, find out who the deal team is and what each person does.
Know that the investment banker plays a large role at the start and end of the process.
And this is exactly how it should be.
Your investment banker brings interested buyers to the table at the start. The investment banker disappears and reappears at the end to get your deal done.
It’s the deal team who does everything else. Ensure you meet the deal team, ask questions, and look at the quality of their work.
The deal of the century won’t be a deal if the deal team is weak and doesn’t perform.
Do the smart thing and take a pass on the strong investment banker with a weak deal team.
You’ll lose every time and this is not the time to lose.
You can take that to the bank.
Looking to maximize success when selling your business? Choose an investment banker.
But not just any investment banker.
The ultimate success of your exit and sale hinges on the quality of your investment banker.
Accept that you don’t know what you don’t know when it comes to selling your business.
But the right investment banker does.
Case in point is the sale of my EdTeach, Embanet. When I had no investment banker, I had a 7-figure 3 times EBITDA offer.
Enter the investment banker I choose.
I had a 9-figure 13 times EBITDA offer.
Same company and only thirty months later.
Nervous about how choose an investment banker that’s right for you?
I’ve done the heavy lifting for you with my in-the-trenches experiences.
Follow the little-known strategies I’ve shared in this article, and you’re off to a great start. With the right timing and team, you could even create a market disruption.
Before you know it, you’ll choose an investment banker who can be a game changer and life maker.
Here’s to you and your success!
Your BIGGEST Raving Fan,