Chicago based Madison Street Capital (Facebook) is an investment banking firm that deals with a wide range of activities. It not only manages the investments of individual investors and companies but also ensures that those investments are maintained in the long run. The company has been doing this for a long time and is staffed by some of the best investment bankers that the industry can offer. Here are 5 questions that Madison Street Capital’s investment bankers recommend asking an investment banking firm before the final decision is made –
What is The Average Fees of the Firm? – Commission based investment banks tend to focus more on closing all deals quickly because they don’t have a high retainer. They are also motivated to get the best and highest valuation that they can. On top of that, these investment banking firms would be a lot more convincing than others.
Who Would The Bank Approach? – It is always recommended to ask for specifics. Who are the people the bank will approach first. If it is a company, who in the company would be approached and when was the last time the bank made contact with that person? These are important questions to ask.
Is The Bank Experienced In This Particular Field? – Is the bank experienced with startups of this size? If a bigger company comes along, would the bank put this project on the backseat? It is advisable to be absolutely candid during the interview and get all questions out of the way, no matter how uncomfortable they may be.
How Much Time Does It Take To Close A Deal? – It is always better to eliminate speculation and ask this question via email. Clients should try to be as specific as possible. They should ask about the time it usually takes for the bank to close a deal. When the engagement letter goes through and the signing is done, the timer starts ticking and having the bank confirm all the details in a statement is a good move.
What is The Bank’s Success Rate? – It is possible to find out the answer to this question with a bit of self-research. A lot of banks have this information on their websites as well. However, if it is not found anywhere else, then clients should ask the banks about their success rate in recent years. Usually, there is a success rate of closing 1 out of 3 deals successfully. If that is the case, would it be wise to go on a retainer when there is a 33% chance?
It is never recommended to blindly choose an investment banking firm, except when their great reputation precedes them, as in the case of Madison Street Capital (YouTube).