Selling a Business
Choosing an Investment Banker
Investment bankers can help you to sell your business, but not all investment bankers are created equal. Here are attributes to look for when you are choosing an investment banking firm.
Most business owners approach the task of selling their company in traditional terms, crossing their fingers and hoping for the best in the commercial marketplace.
If that approach doesn't sound appealing, you may have another alternative. But to get there, you're going to need the help of an investment banker
An investment banker is an agent for an organization that helps private companies convert ownership equity into securities in the primary market. By issuing an IPO (Initial Public Offering), a good investment banker can be a godsend, raising significant capital for business owners and propelling the company into its next stage of life.
The process typically goes something like this: A company selects an investment banker, who in turn guarantees the company a specific amount of capital minus a fee. The investment banker then proceeds to raise the guaranteed capital through the IPO, but assumes all of the risk should the IPO fail to attract the necessary investors. Not a bad deal, right?
In reality, the success of your relationship with an investment banker will depend largely on two factors: Your company's stage of life and the quality of the investment bank itself. Investment banks are most interested in established, mature companies. Although younger start-ups can conceivably attract an investment banker, the pool of potential candidates will likely be substantially smaller and the deal will be less beneficial for the business owner.
If your company is well-established and mature, the only thing standing between you and investment banking success is the selection of a top-rate investment banker. Here are some of the most important characteristics to look for when choosing investment bankers:
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