Insights of a Maverick Investment Banker_Sample

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INSIGHTS OF A MAVERICK INVESTMENT BANKER qualified and vetted parties looking for opportunities in certain sectors and situations. The thus researched buyers all go into a “long list”, which is then filtered to weed out the low-potentials. What remains is investors for whom the target makes strategic sense, that have cash or a strong balance sheet to finance the purchase, and are in a growth phase. From this reduced list: (1) serial acquirers, (2) growthcompelled public or private equity owned companies, and (3) highly synergistic buyers are prioritized. To these, add hot contacts of your investment banker and their network, where they are close to the ear or enjoy the confidence of a decision maker. One such hot contact-generated deal was my firm’s sale in 2010 of green energy contractor STS Group to industrial holding Videoton, for whom this was the first foray into the energy sector. Personal contacts are often critical in selling companies. Stalking the Buyer 12 Cash rich and growth oriented companies are “eligible bachelors” that are constantly bombarded with acquisition ideas. However, most of these calls represent scattergun approaches, which CEOs will spend little time to consider. Companies with mergers and acqusitions (M&A) departments might review such cold mail opportunities, but even they must prioritize offers from known sources that are perceived more credible. The opposite is the case when a decision maker receives a personal call from an intermediary or advisory company she is familiar with, and when there is a “face” to the opportunity. Successful investment bankers nurture their contacts by presenting to them only high-quality, tailor-made deals. Even inside our own international M&A organization, “IMAP”, those partners receive the most attention that deliver quality deals, versus the ”assembly-line producers”, that distribute proposals indiscriminately. It is important to only take
BUYER HUNTING on doable transactions and present them in a digestible and userfriendly format, as the attention span of buyers and their advisors is short and they are looking to disqualify anything that is outside the sweet spot of their interest. Evaluation Shortlisted buyers sign non-disclosure agreements, receive investment memos and a timetable with next steps. Some misshits give insights into neglected areas and unearth new brainstormable fields of research and often lead to finding new, unobvious buyers, with high added value. After strategic buyer sources have been exhausted, move on to financial investors. Here the industry specialist and geographically focused buyers are prioritized over generic private equity funds. Alternative Strategies If the basic strategies prove unsuccessful, turn to other ways to fulfill your objectives. Outliers. One such approach is to find outlier buyers out of sight of your network’s contacts, often in international markets through one of the earlier mentioned “dating platforms”. Years ago, such a service helped us locate an Indian buyer for a South Hungary based industrial company. The buyer conducted a due diligence, but eventually pulled the plug due to communication problems with the management team that was positioned to take over from the founders. The fact that there was no restaurant in town that the vegan buyers liked did not help either. Lesson: Cultural differences can create critical obstacles to deals and must be managed continuously and carefully. MBO or MBI. Another option is to arrange a management buyout (“MBO”) or management buy in (“MBI”) to mobilize management from within, or from outside the company, respectively, and to raise financing for such purchasers to 13
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