5 Criteria to Consider Before Choosing the Right Investment Banker

By John Carvalho
Published: April 10, 2019 | Last updated: April 1, 2024
Key Takeaways

A business owner should consider the five key factors in their search in selecting the right investment banker for the sale process.


Selling your business can sometimes seem like a daunting task, and choosing an investment banker (I-banker) — the right one — can help ease the process. Investment bankers add value to a sale process in many ways. First, a good investment banker will be able to use his past experiences to recognize when demands of the sale process are unfavorable or out-of-the-norm. Usually, just identifying and addressing these issues will indicate to potential buyers that you’re serious about securing a good deal. Beyond just recognizing these signs, a top-notch investment banker will have the toolbox to overcome issues that arise.


Second, the mere presence of an investment banker in the sale process can boost your business’s credibility. Investment bankers can play the role of a middle man and shoulder the burden from the business owner of having the tough conversation with the buyer that are needed to drive the best terms and price. Great investment bankers will also drive competitive bidding tensions between buyers by publicize an auction process or subtlety hinting that there are other pending offers.

Evaluation Criteria to Consider

A business owner should consider the following five key factors in their search in selecting the right investment banker for the sale process.



The M&A process requires constant communication between members of the deal team. Technology has made it easier for information sharing and dialogue but nothing will replace the necessity for face-to-face interaction during the process.

For most sale processes involving companies with an enterprise value below $100 million, having your advisor in close proximity will improve the chances of a successful transaction. The reason is twofold. First and most obvious, is that the investment banking team will be able to quickly attend meetings and address issues that arise in person. It is less likely that an investment banking firm with offices half way across the country will attend every meeting when issues come up. During the M&A process, issues come up often.

The second less obvious reason, is that investment banks with a local presence will, in most cases, work harder to maintain their reputation in the local community and therefore give more attention to deals in their own backyard.


For mid market businesses, a local presence is an important factor in selecting an investment banker, but there are some exceptions. In the case where it is believed that the selling company will garner the attention of many international buyers in a highly competitive auction or is in a very niche industry, the qualification of the investment banking firm may trump the close proximity of the advisor.

Deal-makers Experience and Reputation

An investment bank’s reputation is important, but even more important are the reputations of the individuals who will execute the company’s transactions. Look at all of the past deals that the investment banker and their firm has worked on, and review how many of those have successfully closed. Three specific areas to consider when assessing a deal maker’s experience is deal sizes, industry expertise and role played in past transactions.


Choosing an investment banker who has worked on deals of a similar size is important because the size of the deal often implicates different concerns and demands. For example, a $100 million deal will likely have more complexities and challenges than a $5 million deal. A large part of the value an investment banker brings is familiarity with the sale process that your business will be going through.

An investment banker that has industry expertise relevant to your business is also important. The knowledge of industry standards and norms, business contacts and industry-specific valuation will be an advantage in a sale process. An investment banker with connections to logical strategic buyers will obviously help your business much more than someone who doesn’t.

Make sure to understand the role that the investment banker of choice has specifically played in previous deals. Were they the person leading the transaction or were they just part of the supporting cast? A professional who has worked on multiple deals as the leading sell-side investment banker will have a much better understanding of the process than one who has worked on the deal in a supporting role. Also, get information on the commitment of the investment bank with other mandates. If they are working on five other deals that are much larger than yours, it is unlikely your deal will receive the attention it deserves.

Chemistry and Trust

Personal chemistry is an important consideration when hiring an investment banker or firm to sell your business. The M&A process is a time consuming and intimate activity. You will spend countless hours with your I-bankers as they prepare your business for sale. You should be comfortable listening to their advice and guidance. If the chemistry is not there from the start, an already stressful process, will just get worse over time.

You, and your team if appropriate, must also have full trust in the person you select. This person will mostly be handling the single largest financial transaction of your life, so pick an investment banker that can properly get the job done. Having confidence in your banker’s negotiating skills and ability to protect your interests throughout the sale process is a must. The last thing you want is to be half way into the process, and questioning the actions taken by your selected investment banker.

Adequate Resources

You will need to assess the resources that a prospective investment bank will allocate to your deal. Firms with larger teams may be better able to handle several larger and more complex financial transactions simultaneously. It is still prudent to make sure that that your transaction is not just one of many being executed by the firm. On the other end of the spectrum, an experienced M&A professional at a boutique investment bank can do a lot by themselves and provide a more personal experience. However, you must make sure that they have the resources available to create a dynamic marketing program that maximizes the value of your company and delivers world-class results.

Network of Contacts

M&A is still a game of 'who you know’ in addition to 'what you know’. Finding the right buyer is a key piece of the puzzle and therefore it is important to assess how well connected the firm or individual investment banker is to capital source or strategic buyers. Online social networks have closed the gap between connectivity of large international investment banks versus smaller local boutique firms. It is necessary to assess the firm’s ability to source prospective buyers in appropriate industries or regions.

In the instance where logical prospective buyers are in foreign jurisdictions, a regional boutique investment banks with an affiliation in an international alliance of investment banks may be beneficial. In any event, be certain to understand how the investment bank firm intends to find the best prospective buyer for your business and the depth of their networks.

First Things First

In order to evaluate and choose the right investment banker, a business owner should first reflect on their own objectives that they want to achieve through the process. An investment banker will help further articulate these objectives but having a basic understanding of key considerations during the process will help you decide what you are looking for out of the sale. It will also help you decide which investment banker is best suited to help you achieve your goals.

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Written by John Carvalho | President, Divestopedia Inc.

John Carvalho

John is president and founder of Stone Oak Capital Inc., an M&A advisory firm, as well as a co-founder of Divestopedia. For more than 20 years, John has served his clients on numerous valuation, acquisition and divestiture assignments in a wide variety of industries. John holds the Corporate Finance designation, is a Chartered Business Valuator and a Chartered Accountant. He has made it his life's mission to help entrepreneurs build valuable businesses and Divestopedia serves as an avenue for this cause.

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