Sometimes I feel like an investment banker or M&A advisor is one of those universally disliked occupations. We are usually cast as villains in the movies and I know that when I mention that I'm an investment banker at parties and PTO meetings people immediately conjure up cocaine-fueled, slick haired, Gordon Gekko-types. In fact, for small and middle market companies, we are an important part of the business team. When a family-and-founder business owner makes the decision to sell their company, it is a huge milestone in their lives. Here are some things that might make us seem more relatable if you are on the fence:
1. We Are Not All Drug-Using and Aggressive Vampires
There's really not a great way to prove this to you other than to say, I'm not a drug-using vampire and neither are my friends that are investment bankers. I will add that in general, long hours and lots of travel may create the desire for something more powerful than caffeine to get you through the day. In my experience, most investment bankers talk a lot about drugs and drinking but I don't think there's a lot of real-life experience to back that talk up.
2. We Use a LOT of Lingo
When we are creating a "pitch" or selling materials for a new client, we need to constantly remind ourselves to remove the words and phrases that are exclusive to investment banking. Not only are these phrases difficult for potential new clients to understand, they have a weird way of sneaking into your everyday conversations, and before you know it, you are talking to your dry cleaner about "low-hanging fruit" and "targeted sell-side closing dinners." If you are on the other side of a conversation with an investment banker and 30 seconds go by where you don't know what they're saying, stop them and tell them to cut it out with all the jargon.
3. It's Really Difficult to Get Into This Business
Because investment banking is such a high risk/high reward career, I am surprised at the number of people that want to do this job. Because of the demand, there is no shortage of elite school graduates that are available to fulfill positions. The large, national investment banks are very selective about hiring investment banking analysts and associates. Regional and boutique investment banks are slightly less so, but still have the ability to be very picky.
4. There Really is No Work/Life Balance
I get asked about this all the time. I think the sooner you realize that there is. no. balance. in this job, the better off you are. Instead, there is tipping, like a teeter totter. On some days, you are way over on the work side and on some (fewer) days you are way over on the family side. There isn't really any in-between. I can make myself feel OK about this by reminding myself that I am privileged to be working with people who are selling their most important asset and that it's a life-changing process for them. They don't care if it's soccer team picture day if something is going wrong with their transaction.
5. We Sometimes Do More Psychology Than Finance
This probably isn't the case for the bankers that work with the giant companies, but for those of us that work in the middle market with families and business founders, we are counselors in every sense. We know that selling the business is going to anger your sister. We understand your anxieties when the buyer comes in for due diligence. We feel your disappointment when your daughter says that she doesn't want to take over the family business.
6. We Don't Get Paid Until The Seller Gets Paid
That's right. When the seller gets his or her big check, that's when the investment bankers get paid. This keeps the investment banking team laser focused (there's another bit of lingo) on getting your deal done. You might think that being paid this way could cause investment bankers to try to talk their clients into selling prematurely or with a bad valuation, but any good banker knows that is a lost cause. And in the words of Kimberly "Sweet Brown" Wilkins, "ain't nobody got time for that."
7. We Hate The Due Diligence Process Too
No one likes due diligence. If you are selling your company, due diligence is like a business proctology exam. You will get asked questions about everything you have and haven't done and things you don't have and have never done. As valuations move toward record highs, the buyers take due diligence more and more seriously, because to pay top dollar for a business and to have missed something important can be career ending.
Investment bankers feel as though they do a good job of putting forth all the relevant information in either the Offering Memorandum or the Data Room and when buyers ask for additional items, we groan. We want this deal to close (see #6) as much as the seller and when the due diligence process drags on, we get frustrated too.
You see? We can be quirky, but investment bankers really have an important role as an advisor to our clients - especially the smaller and middle market businesses. We are an invaluable part of a team that every business owner should have and the good ones know that the trust they get from their clients is sacred.