Investment Banker Selection Guide

INVESTMENT BANKER PHILOSOPHY

Understanding the Role of Investment Bankers

INVESTMENT BANKER FUNDAMENTALS

WHAT BANKERS ACTUALLY DO:
☐ Build buyer universe and relationships
☐ Create marketing materials (CIM, deck)
☐ Run the process (timeline, logistics)
☐ Negotiate on your behalf
☐ Provide market credibility
☐ Manage multiple buyers competitively
☐ Guide you through unfamiliar territory

WHEN YOU NEED A BANKER:
☐ Don't know potential buyers
☐ No M&A experience
☐ Want competitive process
☐ Need market credibility
☐ Complex transaction
☐ Want arm's length negotiation

WHEN YOU MIGHT NOT NEED A BANKER:
☐ Clear single buyer (existing relationship)
☐ Acqui-hire (small, talent-focused)
☐ Very small deal (<$10M)
☐ Experienced CEO/board in M&A
☐ Cost sensitivity paramount

BANKER VALUE PROPOSITION:
☐ 10-30%+ higher valuation (allegedly)
☐ Better deal terms
☐ Higher deal completion rate
☐ Less CEO time spent
☐ Professional process management
☐ Protection from negotiation errors

BANKER COSTS:
☐ Success fee: 1-5% of deal value
☐ Retainer: $25K-100K+ (typically credited)
☐ Minimum fee: Often $500K-1M+
☐ Expenses: Travel, materials, etc.
☐ Tail period: 12-24 months

ROI QUESTION:
"Will banker involvement generate more value
than their fee costs?"

Usually yes if:
☐ Deal size >$20M
☐ Multiple potential buyers
☐ No M&A experience
☐ Need competitive process

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COMPREHENSIVE BANKER SELECTION

Investment Banker Evaluation Framework

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INVESTMENT BANKER EVALUATION
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FIRM: _______________
Type: ☐ Bulge bracket ☐ Middle market ☐ Boutique
Team Lead: _______________
Pitch Date: _______________
Evaluated by: _______________

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SECTION 1: SECTOR EXPERTISE (30 points)
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INDUSTRY KNOWLEDGE:
☐ Deep understanding of our market: ___/10
  Evidence: _______________
☐ Knows key players and trends: ___/10
  Evidence: _______________
☐ Credible with buyers in our space: ___/10
  Evidence: _______________

RELEVANT TRANSACTIONS:
| Deal | Year | Size | Role | Outcome |
|------|------|------|------|---------|
| | | $___M | Sell/Buy | |
| | | $___M | Sell/Buy | |
| | | $___M | Sell/Buy | |

Transactions in our sector: ___ in past 3 years
Transactions at our size: ___ in past 3 years
Subtotal: ___/30

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SECTION 2: BUYER RELATIONSHIPS (25 points)
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STRATEGIC BUYER ACCESS:
☐ Direct relationships with likely buyers: ___/10
  Specific names: _______________
☐ Corp dev contacts documented: ___/10
☐ Recent strategic deals in sector: ___/10

FINANCIAL BUYER ACCESS:
☐ PE relationships in sector: ___/10
☐ Recent sponsor deals: _______________
☐ Growth equity relationships: ___/10

BUYER RELATIONSHIP EVIDENCE:
| Buyer | Relationship | Recent Deal | Contact Level |
|-------|--------------|-------------|---------------|
| | Strong/Good/Weak | | CEO/SVP/VP |
| | Strong/Good/Weak | | CEO/SVP/VP |
| | Strong/Good/Weak | | CEO/SVP/VP |
| | Strong/Good/Weak | | CEO/SVP/VP |

Subtotal: ___/25

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SECTION 3: TEAM QUALITY (25 points)
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SENIOR COMMITMENT:
☐ Lead partner time commitment: ___%
☐ Partner involvement in process: ___/10
☐ Partner track record: ___/10
☐ Partner availability: ___/10

DEAL TEAM:
Team Lead: _______________
  Experience: ___ years, ___ deals
  Availability: ___% dedicated

Day-to-day Lead: _______________
  Experience: ___ years, ___ deals
  Availability: ___% dedicated

Analyst Support: _______________
  Availability: ___% dedicated

TEAM CONCERNS:
☐ Too junior day-to-day
☐ Partner spread too thin
☐ Recent team turnover
☐ Bandwidth questions

Subtotal: ___/25

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SECTION 4: PROCESS APPROACH (15 points)
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RECOMMENDED APPROACH:
☐ Broad auction
☐ Targeted process
☐ Negotiated sale
Rationale: _______________

TIMELINE:
☐ Prep to market: ___ weeks
☐ First round: ___ weeks
☐ Second round: ___ weeks
☐ LOI to close: ___ weeks
☐ Total: ___ months

MARKETING QUALITY:
☐ CIM sample quality: ___/10
☐ Presentation materials: ___/10
☐ Buyer positioning strategy: ___/10

PROCESS CONCERNS:
☐ Too aggressive timeline
☐ Unrealistic buyer list
☐ Over-promising valuation
☐ Inexperienced process lead

Subtotal: ___/15

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SECTION 5: COMMERCIAL TERMS (15 points)
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FEE STRUCTURE:
Retainer: $___/month × ___ months = $___
☐ Credited against success fee: ☐ Yes ☐ No

Success fee: ___% of transaction value
Minimum fee: $___
Fee at expected valuation: $___

COMPARISON TO MARKET:
☐ Above market ☐ At market ☐ Below market

FEE NEGOTIATION POINTS:
☐ Tiered fee (higher % at higher price): ___
☐ Lower minimum fee: ___
☐ Shorter tail period: ___
☐ Reduced retainer: ___

OTHER TERMS:
Exclusivity period: ___ months
Tail period: ___ months
Expense cap: $___
Termination provisions: _______________

Subtotal: ___/15

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TOTAL EVALUATION
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| Category | Weight | Score | Weighted |
|----------|--------|-------|----------|
| Sector expertise | 30 | /30 | |
| Buyer relationships | 25 | /25 | |
| Team quality | 25 | /25 | |
| Process approach | 15 | /15 | |
| Commercial terms | 15 | /15 | |
| **TOTAL** | **110** | | **/110** |

RECOMMENDATION:
☐ Strongly recommend
☐ Recommend with modifications
☐ Acceptable alternative
☐ Do not recommend

KEY STRENGTHS:
1. _________________________________
2. _________________________________

KEY CONCERNS:
1. _________________________________
2. _________________________________

Banker Comparison Matrix

Criteria	Weight	Firm A	Firm B	Firm C	Notes
Sector expertise	30%	/10	/10	/10
Buyer relationships	25%	/10	/10	/10
Team quality	25%	/10	/10	/10
Process approach	15%	/10	/10	/10
Commercial terms	15%	/10	/10	/10
WEIGHTED TOTAL	100%	/10	/10	/10
Success fee		___%	___%	___%
Minimum fee		$___K	$___K	$___K
Lead partner
Reference score		/10	/10	/10
RANK		#___	#___	#___

Comprehensive Banker Interview Guide

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BANKER BAKE-OFF INTERVIEW GUIDE
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OPENING (5 min):
☐ Introductions
☐ Explain we're running a process
☐ Set expectations for meeting

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EXPERIENCE & TRACK RECORD (20 min)
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SECTOR EXPERTISE:
"Tell us about your experience in our sector."
Listen for: Depth of knowledge, specific deals, trends

"What transactions have you done that are most
comparable to ours?"
Listen for: Size, type, outcomes, lessons

"Walk us through a recent deal that didn't close.
What happened?"
Listen for: Honesty, self-awareness, lessons learned

BUYER RELATIONSHIPS:
"Who are the most likely buyers for our company?"
Listen for: Specific names, rationale, relationships

"Which strategic buyers do you have relationships with?"
Listen for: Corp dev contacts, deal history, access

"What PE firms do you know that are active in our space?"
Listen for: Specific funds, recent deals, dry powder

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TEAM & RESOURCES (15 min)
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TEAM STRUCTURE:
"Walk us through who would work on our deal day-to-day."
Listen for: Seniority, experience, availability

"What percentage of your time would this deal get?"
Listen for: Realistic commitment, competing deals

"How many deals is this team working on now?"
Listen for: Bandwidth, prioritization

"What happens if the deal lead leaves your firm?"
Listen for: Continuity planning, firm vs. individual

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PROCESS & APPROACH (20 min)
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STRATEGY:
"What process would you recommend for us?"
Listen for: Rationale, buyer universe, timeline

"How would you position us to buyers?"
Listen for: Value proposition, differentiation

"What do you see as our key selling points?"
Listen for: Understanding of business, market

"What are the biggest risks to getting this deal done?"
Listen for: Honest assessment, mitigation plans

TIMELINE:
"Walk us through the timeline you'd propose."
Listen for: Realistic milestones, flexibility

"What could accelerate or slow the process?"
Listen for: Experience, practical knowledge

VALUATION:
"What valuation range do you think is achievable?"
Listen for: Reasoning, comparables, honesty
(Beware: Banks often overpromise to win mandates)

"What comparable transactions would you use?"
Listen for: Relevance, recency, logic

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COMMERCIAL TERMS (15 min)
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FEES:
"Walk us through your proposed fee structure."
Listen for: Transparency, flexibility

"What's your minimum fee and why?"
Listen for: Reasonableness, negotiability

"How does your fee compare to alternatives?"
Listen for: Self-awareness, justification

TERMS:
"What's your proposed tail period?"
Listen for: Standard is 12-24 months

"What are your termination provisions?"
Listen for: Fairness, flexibility

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REFERENCES (10 min)
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"Can you provide 3 CEO references from
comparable transactions?"
☐ Reference 1: _______________
☐ Reference 2: _______________
☐ Reference 3: _______________

REFERENCE CALL QUESTIONS:
☐ How was working with this team?
☐ Did they deliver what they promised?
☐ How involved was the senior partner?
☐ What would you do differently?
☐ Would you use them again?

Fee Negotiation Guide

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BANKER FEE NEGOTIATION
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TYPICAL FEE STRUCTURES:

BY DEAL SIZE:
<$25M: 4-5% + higher minimum
$25-50M: 3-4%
$50-100M: 2-3%
$100-250M: 1.5-2.5%
>$250M: 1-2%

NEGOTIATION LEVERAGE:
More leverage if:
☐ Multiple banks pitching
☐ Attractive deal (easy to sell)
☐ Previous relationship
☐ Repeat business potential
☐ Marquee name/reference value

NEGOTIATION TACTICS:

On success fee:
☐ Ask for tiered structure (higher % for higher price)
☐ Propose lower base with upside tier
☐ Benchmark against competitors

On minimum fee:
☐ Challenge if too high for deal size
☐ Negotiate down in exchange for exclusivity
☐ Tie to performance milestones

On retainer:
☐ Negotiate lower monthly amount
☐ Ensure fully credited against success fee
☐ Cap total retainer exposure

On tail period:
☐ Standard is 12-24 months - negotiate to 12
☐ Carve out buyers not introduced
☐ Reduce for deals >6 months post-term

On expenses:
☐ Cap at fixed dollar amount
☐ Require pre-approval over threshold
☐ Exclude certain categories

SAMPLE NEGOTIATED STRUCTURE:
Base fee: 2.5% of transaction value
Tier 1: +0.5% for value >$75M
Tier 2: +0.5% for value >$100M
Minimum fee: $500K
Retainer: $25K/month (credited)
Tail: 12 months
Expenses: Capped at $50K

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