For a middle market seller to obtain a premium-priced deal with terms that fully insulates them from post-closing liability, it is imperative they find an investment banker/acquisition consultant that has certain capabilities and characteristics. A seller should be looking for the following things in their investment banker:
1. An investment banker that realizes, and actually relishes, that a sale is not a win-win situation. In reality, it is actually much closer to a win-lose situation. This type of banker/consultant recognizes that negotiations are a psychological war between disparate interests that have conflicting goals. The seller wants the maximum attainable premium price, while the larger, sophisticated acquirer expects a discounted price, as they normally get their own way in middle market acquisitions. There is no way these diametrically opposite interests can’t result in a psychological battle where the better prepared, more determined party will prevail.
2. An investment banker with compassion and concern for their clients that understands most acquirers want the seller’s company for much less than it's worth. The right banker/consultant for you will be steadfast and resolute, concerned only with protecting and maximizing your realistic interests. If an acquirer won’t optimize your interests, the right banker/consultant will not consummate a deal under lesser terms.
3. An banker/consultant that has the aggressiveness, determination, toughness and force of personality combined with the market and financial knowledge to force their will on large corporate acquirers or sophisticated private equity firms. If those traits are not present in the investment banker, you can be assured that a premium price will not be yours.
4. An investment banker that has the executive and business skills, transcending the financial skills that any banker/consultant should have, to fully-understand your company, its strengths, market niche and potential. They also must have the ability to present and articulate these facts clearly and persuasively to an acquirer. The investment banker has to better understand your company than the acquirer and understand your industry at least as well if they are to prevail.
5. An banker/consultant that has the patience and confidence to wait, if necessary, to obtain a premium-priced, all-cash deal. In certain situations, they must be willing to allow the power of their knowledge and personality traits to have the time necessary to wear down the acquirer to agree to the deal and terms that are essential to the maximization of your interests. This is the only type of deal you want.