One of my first meetings of the year was with an investment banker from a well known firm that primarily advises technology companies with sales of $10-50mm. I have gotten to know a lot of bankers through the years. A handful have been truly exceptional and have made a difference for our companies. Here’s what distinguishes those that I’d consider exceptional:
1) They really know their sector deeply. This is not just knowing the people who work in Corporate Development at the relevant acquirers and calling on them routinely. Instead they have real thoughts about how the next wave of value can be created in a sector and they are not afraid to espouse those views.
2) Because they have a clear view on their sector, they know which companies they want to work with and why. This is the key thing. They may not have as much inside knowledge as an investor would, but they understand why certain companies are important and they only want to focus on those.
3) They take the long view, particularly with respect to their own compensation. Knowing who they want to work with, they are willing to pour their efforts (and often their relationships) into helping the best companies. This is usually long before there is any discussion of an engagement letter.
I actually had to beg a banker who has been quite helpful to my companies to send us an engagement letter for one of our recent exits. He helped us close two strategic investors and introduced the ultimate acquirer long before we ever worked out what his deal would be. He had no competition for the assignment because he had totally distinguished himself as a true advisor to the company. In the eyes of the board and management, he had completely earned his place at the table and the substantial fee that his firm was ultimately paid.
I have a lot of friends in investment banking and they are all smart, hard working, honorable people. And I recognize that they are buffeted daily by changing priorities within their organizations and amongst their clients. But it is the rare few who approach things as I’ve described above.