Venture Deals, 4th Edition

CHAPTER 17How to Engage an Investment Banker

We’ve talked about investment bankers throughout this book. In general, we are against using them in early stage financings, neutral in later stage financings, and strongly supportive in an acquisition context. While investment bankers aren’t cheap, they can add tremendous value in many acquisition scenarios. Because of this, we solicited the help of Rex Golding, Managing Director of Golding Partners LLC, to provide thoughts on how to best find, engage, and compensate investment bankers. We’ve known and worked with Rex for over 20 years and value his wisdom and experience on this topic.

Why Hire an Investment Banker?

Your company has reached a classic decision point: raise another round of financing to scale the business or find the right acquirer that can immediately scale the business and provide liquidity to your shareholders. Maybe you can’t raise more money and you are looking for a better solution than just giving up. Should you hire an investment banker to give you the right answer? No. Determining an exit strategy is the job of your board of directors, the CEO, and the founders of the company. However, once your board has made the decision to seek an acquirer, an investment banker can play an important role in managing the mergers and acquisitions (M&A) process to a successful conclusion.

Should you always bring in a banker? No. There are situations where a banker will not necessarily be additive or can even be detrimental. ...