Home Industry News An Advisor Guide for Middle-Market Transactions

An Advisor Guide for Middle-Market Transactions

0

Industry-Focused Investment Banks/M&A/Financial Advisory Firms

Who should hire an industry-focused advisor:
Middle-market businesses:
$25 to $500 million in annual revenue

Industry-focused firms differentiate themselves from generalists first and foremost by developing long-term relationships with their clients. Not just interested in one transaction; these advisors help companies over longer periods of time and their advice is sometimes strategic as well as financial/transactional. Spending 100% of their time in one industry has its advantages. Industry-focused firms are particularly effective in understanding and communicating the unique dynamics of certain geographic markets, distribution channels and individual competitive advantages. These advisors typically have proprietary knowledge about the acquisition marketplace that an industry-outsider will not have. Often times, this knowledge results in greater shareholder value and less risk for their clients. Smaller firms will also provide more partner-level attention to your process, resulting in a more effective process. It is also not uncommon to see a client insist a generalist firm bring in an industry-focused firm to co-lead on transactions.

PROS
• All of the pros of a generalist investment bank, plus:
• A better understanding of your business, the potential buyer universe for your business and which buyers are a good “fit.”
• Partner-level interaction.
• Proprietary information which helps drive valuation, terms, etc.
CONS
• Up-front retainer fees.
• Don’t have access to the public capital markets.
• Smaller firms may not have international contacts.
• May not have analysts on staff that compile industry statistics and follow public companies.
• Can only work on a few deals at once.

Note: We deliberately left off attorneys and accountants, who focus on law and accounting/taxes, respectively—not the transaction world. You wouldn’t hire a doctor to file your taxes. Don’t make this mistake.