– Sergio Garcia del Bosque, Executive Director, Seale & Associates


When an Investment Banker is mentioned, many people immediately think of large New York and/or Wall Street banks advising public multinational companies on their transactions. Maybe you can also imagine Richard Gere buying companies in the movie “Pretty Woman”. Likewise, the general perception of the Investment Banker is that its role is to value the company to be sold and negotiate the price of the sale with the buyer. Although these ideas and perceptions are not entirely incorrect, they are too short to describe the role of the Investment Banker in corporate sales. In this article I will try to give you a total vision of the role of an investment Banker in this process.

The Investment Bankers represent a diverse range of companies including multinational public but also represent private equity firms and family businesses. The Investment Bankers play a very important role, (many times more important in the middle market of transactions) when providing advice in the a) analysis of the selling company, b) design of a sales process, c) preparation of the sale process , d) contact with potential buyers, e) execution of the sale process, f) audit of the business and negotiation of purchase agreements and g) coordination of closing the transaction. The benefits of working with Investment Bankers experienced are mainly reflected in 1) maximization of value, terms and conditions of the transaction, 2) efficiency of time and resources of the company and its shareholders and 3) greater certainty of closing the transaction. All this is achieved by designing and executing a customized process taking into account the situation of the selling company, the markets in which it participates, the macroeconomic environment of the countries where it operates, among many other factors.

A sales process must be designed specifically for each company. Having said that, I share an example of activities and sequence of a typical sales process. These processes are coordinated from start to finish by an Investment Banker and well executed can last between 4 to 6 months.


  • Analysis of the Company and its Strategic Alternatives

In this initial phase of the process, a business valuation is carried out and external situations of the environment where the selling company participates are analyzed. An Investment Banker experienced and active in the market will be able to perform a technical and practical analysis of the situation of the company.


  • Sales Process Design

In this phase of the process the results of the analysis of the company and the environment in which it participates with the shareholders of the selling company are discussed. In this phase, a specific sales process is also designed based on this analysis, as well as the expectations and concerns of the shareholders of the selling company. The product of this stage includes a) design of the process of tasks to be executed, d) timeline of the process, c) type of buyer (s) to be contacted, d) additional external advisors to be hired (fiscal, legal, accountants), among others. An Investment Banker experienced will seek to design a sales process that minimizes the disruption of the selling company and maximizes the terms and conditions of the transaction in favor of the shareholders of the selling company.


  • Process Preparation

In this phase of the process, potential buyers are investigated and sales materials specific to the sales process are generated. An experienced Investment Banker will be able to generate clear and concise sales materials from the selling company and identify the most capable potential buyers who can offer better terms and conditions in a sales process. Additionally, at this stage, additional external advisors such as tax attorneys, lawyers and accountants may be hired. An Investment Banker active in the market has relationships with the advisors indicated for this type of transaction and may advise the shareholders of the selling company to select the best option for the selected sale process.


  • Contact and Prequalification with Buyer (s) Potential (s)

In this phase of the process, potential buyers are contacted, there may be several or one depending on the selected sales process. This phase is crucial to determine the level of interest of potential buyers in the transaction. An experienced Investment Banker has the ability to interpret the initial reactions of a potential buyer when hearing for the first time about the sales process.


  • Delivery of Materials and Request for Offer

In this phase of the process, financial and operational information of the business is shared with potential buyers. Once this information is delivered, potential buyers are asked to prepare a preliminary offer for the business. An experienced Investment Banker is able to communicate eloquently to potential buyers 1) the level of competence of the process and 2) the expectations of their client to be able to make a transaction. Communicating these points effectively maximizes the likelihood of obtaining offers with better terms and conditions of the transaction for the shareholders of the selling company.


  • Company Audit (“Due Diligence”) and Negotiation of Definitive Contracts

In this phase of the process, the audit of the potential buyers to the selling company is coordinated. Also, at this stage, a negotiation of definitive purchase and sale contracts is carried out. An experienced Investment Banker will seek 1) minimize the disruption to the selling party during the business audit, 2) coordinate the internal teams and external consultants of the selling company to form a single front before potential buyers and 3) negotiate the best possible terms and conditions in the sales contract. It is very important for the Investment Banker to coordinate with the selling company’s attorneys since the necessary sales contracts for these transactions include many details and concepts that only the Investment Banker will know due to his analysis work with the selling company and its negotiations with potential buyers.


  • Closing of the Transaction

In this phase of the process, the closing of the transaction is coordinated. On many occasions, the purchase contracts are not effective at the date of signature, since there are pending tasks or regulatory approvals (e.g. approval of the competition commission) necessary for the closing of the transaction. An experienced Investment Banker will seek to coordinate to ensure that these tasks between signing and closing are performed in an expedited manner to maximize the certainty of closing the transaction.