How to Hire an Investment Banker
When you’re looking for funding, whether you’re taking chips off the table and bringing in P.E. money or funding your next growth phase, the process is going to be a little like that home renovation project you underwent last year. It’s going to take 3 times as long and cost twice as much.
In part, that’s a joke, and in part, managing your expectations of the complexity of the process of raising capital is essential to creating the most profitable partnership you can have.
During the process, you’re going to need a team. You need an Investment Banker, you also need a business transaction lawyer, a good CPA, you’ll need your Bookkeeper to be involved and, if you have one, your CFO’s time will be spent working with the team to determine valuation.
An investment banker’s job is to help you create the forward-facing package of your company and then share the information about it with the right investors. So, having the right investment banker on your side can make all the difference.
The right investment banker for one company, say, a startup with 2 dedicated founders might be quite different from the right partner for a large company that sells widgets in multiple markets and has a vast hierarchy.
Here are a few questions to ask as you align with the right partner to help you get funding:
Size Matters
Bigger isn’t always better. If you’re not raising hundreds of millions of dollars, you’re better off with a smaller firm where you have access to the attention of the A-Team than a Goldman Sachs where you’ll have someone from the mail-room working your cap-raise.
Experience Matters
Working with someone who understands how to pitch a service-based business might be quite different from working with someone who works predominantly in the manufacturing or distribution space. Finding someone who understands how your business runs and what makes it valuable is essential to a successful cap-raise.
Money Matters
Fee-based, success-based, retainer-based… the fee structures vary widely. Draw up an agreement and be comfortable with it before you start working with your investment partner. They are an essential part of your team and can help you shorten the process, bring in the right partner and acquire the right amount of funding for your business. Don’t overlook the details of the engagement.
In the end, like with every hire, culture counts so interview, talk to the person who is going on this journey with you. The stakes are high and this decision counts. We should talk.