Which Bank Will Suit Your Investment Needs?

investment banking ideas

When companies at one point in time, choose to raise capital either through borrowing or avenues such as equity investment, inevitably, they will have to seek the services of an investment bank. But how does one decide on an investment bank – more over an individual who works in a financial institution that is in the business primarily of raising capital for your companies and your money?

Investment bank selection tips

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Here are few things to consider when selecting one:

Banks success rate

A key consideration is the success rate of the investment bank. Success rate of an investment bank can be deduced from the percentages of the banks engagement letters that actually lead to closed deals. A typical 25% percent to 35% is a good indicator.

Time taken to close a deal

While also the success rate is important, you should also consider the average time that the bank takes in closing a deal. The length of time should not be a mere speculation but a confirmed statement that is supported by a conducted analysis.

Transaction experience

The transaction experience of the investment bank is also a key consideration when deciding on an investment banker. It is advisable to seek validation of the banks experience through its transaction history. Search for transactions which have been completed successfully specifically in your line of industry. A consistent number of successful transactions in your specific industry will mean that the bank has deep insight in your industry. Moreover, you can benefit a great deal as the banks will have numerous contacts in the industry for networking purposes.

Previous clients

If your company is just a startup you might want to consider also if the bank has ever worked with firms of your caliber. If a bank has always preferred to work with large companies, it is most probable that your company will become a second or third tier customer when the large companies need attention.

Confidence in you

Make the bankers to be specific as to why they are interested in your business?

If they do not believe in you, your business or your management team, then most probably they won’t present your company to potential investors with much zeal.

Customer relation

While most people may not attest to this, personal chemistry is another aspect that you should consider when considering an investment banker. This is because your investment banker is someone who will act on your behalf in deliberations, meetings, and negotiations with buyers. Thus, your bank should be able to relate well with you if you are to be confident in them.

Valuation

Valuation is another key consideration when deciding on an investment banker. How the bank valuate you should guide you in knowing whether they are a good option or not. Ideal investment banks provide guidance on their valuation expectations, and they attribute to the fact that the price of a business is closely aligned with its future strategic value to its customers.

Execution strategies

Lastly, when deciding on the right investment banker, you can also examine the execution strategies of the bank. A sure way of doing this is by monitoring the commitment of board members to key meetings such as the drafting sessions. A sound investment banker will have a combination of transaction skills, industry experience and will be committed to your success.

When choosing an investment banker, you should focus on the relationship that you will have with them, the expertise they possess and the relevant experience they have in your line of industry. Have you noticed any other factors that are crucial when scanning for the right investment banker?

 

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