Making an Informed Decision
•Track Record: There is no better way to judge someone’s capabilities than to look at their track record. You should ask for details like the number of deals they have closed so far, percentage of deals they are able to close, size of the deals, deals closed within your industry, etc. From the answers to these questions, you will be able to assess the success rate of the firm, their experience in your industry and the probability that they will be able to successfully close a deal for your business too.
•References: This is a very credible method of validating a firm’s track record. You must ask the services provider to give names of some references that you can talk to. While talking to the references, try to find out more about their experience with the firm rather than the achievement.
•Team: Behind every successful investment banking firm, there are competent bankers. You should ask for the details of the entire team, as well as the specific person who will represent your business. This will help you find out if the person representing your business is competent and experienced enough to handle the deal.
•Time: For businesses, time is money. As mentioned earlier, activities like fund raising are time-critical too. Therefore, it is very important to find out the time it will take for the financial institution to close the deal. Also, since the firm will charge you some sort of fixed monthly fee, you would not want to continue paying them for a very long time without seeing any results.
•Fees: Lastly, you should ask about the fees that you will be charged by the investment banking firm. The fees can be a fixed retainership, commission on successful closure or a combination of both. An important point to consider here is that a firm working on a fixed fee along might not be interested in closing the deal quickly for you.