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  • Bilanz Capital

The ROI Of Hiring An Investment Banker

As a founder, you've put in years of hard work and dedication to build a successful company. Now, as you consider selling your business or part of it via equity raise, you may be tempted to handle the process on your own. However, numerous studies and real-world experiences demonstrate that hiring the right investment banker can yield significant financial rewards. This Forbes article explores the benefits of engaging an investment banker and highlights the crucial advantages they bring to Transaction and dealmaking. Key Highlights of the article :

  • Hiring an investment banker can result in valuation premiums of around 25%, according to a study by the University of Alabama and Portland State University.

  • Approximately 99% of business sales by sophisticated institutional sellers involve an investment banker, indicating the high value they bring to the process.

  • Northern Trust's Business Advisory Services group found that sellers represented by an investment banker obtained an average EBITDA multiple 1.5x higher, with lower risk.

  • The advantages of hiring an investment banker include securing greater upfront cash with favorable terms, increasing the likelihood of a successful closing, staying focused on your core business, and reducing stress levels.

  • An investment banker adds credibility and creates the impression of competing strategic buyers, driving up the value of the acquisition.

  • Investment bankers can align the deal terms with your exit strategy and personal goals, reducing the chances of seller's remorse.

  • Investment bankers leverage their expertise in managing the transaction process, running due diligence, creating financial projections, and negotiating and structuring the deal.

  • They frame the opportunity in a compelling way, emphasizing positive aspects and mitigating potential challenges.

  • Investment bankers maximize competitive intensity by creating bidding wars, ensuring multiple potential buyers are engaged throughout the process.

  • Their negotiation skills, honed through experience, lead to favorable terms, including purchase price, timing, and deal structure.

  • Investment bankers maintain a professional approach during negotiations and can act as a buffer, preventing emotions from interfering in the deal-making process

Conclusion Although the idea of handling the transaction independently may be tempting, the financial rewards and numerous benefits of hiring an investment banker make it a highly valuable decision. Studies and experiences of successful sellers indicate that the expertise, negotiation skills, and process management provided by investment bankers significantly increase the value of a transaction. By partnering with an expert M&A advisor, you can ensure you receive the best options, prices, and terms, ultimately maximizing the success of the transaction which could be a life-altering event.


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