Is Selecting an Investment Banker with a Specific Industry Focus a Good Idea?

Jan 3, 2023 | The Exit Concierge Diaries

Almost every week, I find myself speaking to a CEO who is entering the exit process, and he or she says, “I want to hire an investment bank that specializes in my industry.”  My response to them is always the same, “Do you really think that’s a good idea? Have you considered that investment bankers in your industry have a huge incentive to be loyal to the buyers – whom they deal with repeatedly over time – instead of the seller, whom they deal with once?”

With one of our Exit Concierge clients, we recently opted to use a generalist investment bank, after the specialist investment banker told me that there were only five real buyers for my client’s company.

I let him know that even though there were only five buyers in his opinion, The Exit Concierge Process requires the investment bank to speak to 200 buyers, in order to hone their skills in positioning the company and to also drive the price up.  The specialist investment bank would not budge.  They were convinced that there were only five likely buyers.

So, I opted to hire the generalist investment banker who trusted The Exit Concierge Process and agreed to speak to more than 200 buyers. As a result of that, when the bids were due, we had 11 bidders, and super interestingly, none of the 11 bidders included the five, “likely buyers” that the specialist investment banker had suggested are the only buyers.

More interesting was the fact that the specialist investment banker told us that the industry norm was 6 times EBITDA, and we were able to sell the company for 17 times EBITDA.

The moral of this story is that you must hire the right bankers, who are willing to follow the process.


The Exit Concierge Diaries

I. When is the Best Time to Sell a Business?

II. How Does the Business Cycle Play into Fire Demand?

III. How Hard is it to Sell a Private Company for $100 Million?

IV. What to Do if Your Private Company is Distressed, but You are Looking to Exit.

V. How an Exit Concierge™ Uses Exit Process Management™ to Make Selling a Private Company Easier.

“Simplicity is the ultimate sophistication.”

Leonardo Da Vinci

If you are serious about properly exiting your business – and your company is worth at least $25 million – please schedule a no-obligation Exit Discovery Call with our Team now.