Working with an Investment Bank: Best Practices

In the preceding two blog posts we’ve covered some key facts about what is an investment bank and what services they can provide. Now lets spend a little time discussing some best practices that might make sense to incorporate into your interactions with bankers or advisors.

Best Practices for Interacting and Working with an Investment Bank

While every situation is different, below are a few guide rules to consider when cultivating a relationship with a bank:

1) Make Time for Banks

• Make time for banks and make sure to tell them about new developments in your business and why it may be exciting for certain potential acquirers (who the bank should be talking to).
• Playing hard to get isn’t going to do you any favors.

2) You Can Reach out to Banks

• If banks aren’t calling you, absolutely feel free to call and introduce yourself.
• Just because they haven’t talked to you yet doesn’t mean that they won’t be excited to talk to you.

3) Chose the Right Point of Contact

• If you are cold calling a bank, you don’t necessarily need the most senior person. You can begin reaching out to a vice president.
• A VP may have more time for you and will be keenly focused on developing your relationship and deal so that they can be promoted.

4) Make Sure to Develop Relationships with Many Different Banks

• Two heads are better than one.

5) Divide Your Relationships Between Financing and Strategic Tasks

• A convenient way to develop multiple relationships is to divide your potential banks into financing or strategic discussions. Ex: Who will help with potential capital raises and who will help with potential exits

6) Be Upfront If You Want People to be Upfront with You

• While you should ask for a lot from banks, be upfront with what business you think you will have for them, and in what time frame, as well.

7) Balance Key Variables When Selecting a Bank

• When selecting banks for a transaction, a few key items to weigh include the following: relationship, precedent experience, fee, connections and team.

8) Fees are Negotiable

• Since every transaction is tailored, there’s no reason a fee shouldn’t be designed to promote the desired incentives.

 
While the specific roles of an investment bank are anything but defined, especially with respect to interacting with an expansion-stage company, my three posts on this topic have attempted to make a little more sense out of it. Hopefully, by understanding some of the key facts about investment banks, these blogs have shown you what you can get out of a relationship with a bank and how you should go about getting it.
Read the previous two posts in the series on working with investment banks:

Part I: Key Facts You Should Know

Part II: Important Services Investment Banks Provide