Managing the Deal Process
FACTORS TO CONSIDER WHEN HIRING AN INVESTMENT BANKER
Global Growth Partners provides sound advice and analytical guidance that helps clients navigate the current capital markets environment. Our investment banking team closely considers our client’s situation, the optimal transaction structure and industry dynamics to identify custom solutions that maximize the Company’s competitive position and value. Furthermore, major strategic decisions require assistance with transaction options and strategies that can either enhance or diminish the Company’s value and therefore cannot be taken lightly. GGP has extensive experience advising clients on these very sensitive and critical issues.
An investment banker should add value by handling the following processes:
CORE INVESTMENT BANKING PROCESSES AND SERVICES NOT OFTEN CONSIDERED
"Making a Market" for the Transaction
- The most important values a full-service, credible investment banker brings to a client are i) the ability to “make a market” for the client’s company (be it an outright sale or raising investment capital for a buyout or acquisition) and ii) to help owners make strategic “business” decisions involving significant portions of their net worth.
- Similar to how attorneys provide professional legal council and CPAs offer expert accounting advice, qualified investment bankers should provide a professional, full-service approach to navigating the current deal environment and capital markets. In this vein, GGP’s full service professionals have the experience, dedication and global contacts to run a highly effective auction process in order to position, negotiate and close deals while simultaneously optimizing value, terms and conditions in a wide variety of investment banking transactions.
- According to numerous studies over many years, most deals fall apart (some estimates say as many as 2 out of every 3). Thus, having an experienced team of professionals with the systems and ability to conduct a well orchestrated process with many bona-fide financing sources or investors is invaluable and greatly increases the odds of closing a transaction with the best of market terms.
- Global Growth Partners has the flexibility to work with a full spectrum of clients and investors. This includes servicing public, private and unique niche business and managing strong relationships with private to multinational financing sources, world-class private equity groups, hedge funds and other capital investors.
Managing the Deal Process
As your dedicated advisor, GGP has a proven, comprehensive and systematic investment banking approach that includes the following stages:
- Marketing & Bid Stage: Contact potential financing sources/investors, manage confidentiality through non-disclosure agreements, seek initial term sheets and prepare and organize data room/due diligence materials.
- Preparation Stage: Initial due diligence, valuation and financial analysis, create and refine list of potential financing sources/investors (generally between 80 – 120 candidates, though the amount of candidates vary based on deal type, industry and the client preferences), prepare marketing materials (Confidential Information Memorandum and one page “teaser”)
- Negotiations/Closing Stage: Select potential financing source/investor for exclusive negotiations, provide access to data room/due diligence materials, negotiate terms, refine the definitive agreement and close transaction.
In most cases, a Company would have difficulty managing the investment banking process in addition to other daily responsibilities and requirements of the business. Potential pitfalls include:
- Potentially losing focus of daily operations (which can negatively effect the bottom line and make the transaction much more difficult).
- A Company may not have in-house experience or systems to: i) run a smooth transaction process; ii) conduct efficient and effective negotiations by representing themselves; iii) prepare for and organize necessary due diligence; iv) manage confidentiality; or v) maintain positive working relationships with potential buyers / lenders / investment partners as negotiations heat up.
- As most people know, it is very difficult to negotiate for yourself (in fact, a third party negotiator can probe and test while the Company could become obligated by such activities). Therefore, current and relevant experience as a negotiator is essential.
- Ultimately, having an intimate knowledge of what is “market” and how different types of financing sources/ investors will behave and react is crucial to transaction success. This knowledge only comes through years of investment banking experience and multiple transaction successes.