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Private Investment Banker

Definition - What does Private Investment Banker mean?

A private investment banker provides a number of services related to middle market deal making such as acquisitions, divestitures and financings.

Private investment banker refers to a practitioner that provides advice on transactions in the lower and middle market between $5 million and $150 million. They usually practice in boutique or regional investment banks rather than the bulge bracket firms such as Goldman Sachs, Credit Suisse, Morgan Stanley, etc.

The ability to raise capital and deal complexity distinguishes an M&A intermediary from a private investment banker. Private investment bankers are generally more active in raising equity or private placements and have more experience with complex transactions such as MBOs and recapitalizations.

Public investment bankers, on the other hand, will have more experience with access to the public markets, use of public auction techniques, tender offers and IPOs. Public investment bankers also typically work on larger transactions with enterprise values of $50 million plus.

Divestopedia explains Private Investment Banker

A business owner must assess the skills and experience of the professionals they are considering hiring when completing an M&A transaction. It is important to consider the following attributes:

  • Track record of success - What is their closing ratio?
  • Regional focus - Do they have the reach and network to find the best buyers?
  • Industry expertise - Do they understand the operations, trends and M&A environment of your industry?
  • Transaction size - Are they capable of handling your deal size?
  • Transaction type - Do they have the intricate knowledge of your deal complexities (i.e. MBO, reverse merger or IPO)?
Based on the above assessment, an owner may determine that a private investment banker is better suited than an M&A intermediary or public investment banker to complete the deal. Fees should also be considered as a public investment banker will likely be the most expensive option.

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