![]() Deal Origination of Private Equity Compared to Corporate Development If they are willing to sell without proper consultations and attorneys, that business is questionable. Selling a business is such a massive transaction, especially for a family-owned business. There are fees to pay, but I would argue that it's the market speaking. People forget the critical role that investment bankers play in preparing a company for sale and creating a way for the management team to run an M&A process without totally disrupting the business. But, the plethora of buyers drives prices and leverage multiples up. Now, the mindset is that the running auction drives the price up. Because of this, the investment banker, instead of doing a private equity deal, might go public or might sell to the strategic buyer.Īs the industry has matured, private capital has developed into its own ecosystem, and investment bankers and deal sources are critical. So private equity investors started out with the mindset that investment bankers are competition. And there was a finite amount of capital that was raised by the enforcement levels and the KKRs. Early on, if you could raise the capital, you could do deals. You can go back and look at the trajectory of the industry. Text Version of the Interview Importance of Investment Bankers as Channel Partner
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