Investment banks fill critical roles in middle-market mergers and acquisitions. These transactions can be highly cumbersome, making them difficult for owners to navigate. However, the data is clear: owners who hire investment bankers get more for their business, and are more likely to close the deal. So why hire a banker? Here are 5 key advantages.

The Middle Market is Confusing
There’s no public stock market that offers insight about current valuations or comparables. Most owners only undertake one transaction in their entire lives, and have no realistic expectation of knowing how much their company is worth without outside input. Calling a few competitors does not equate to a competitive bidding process or meaningful attempt at a sale. But an investment banker with middle market experience can tell you how much your company is worth, in addition to helping you run a well-designed sale process that earns maximum value.

Buyers Attempt to Capitalize on Middle Market Owners’ Ignorance 
More than 3,000 PE firms focus on the middle market. Why is this, when there are hundreds of millions invested in companies in the upper tiers of the market? It’s because middle market sellers offer them an advantage. Investment bankers help level the playing field, bringing their expertise to negotiations so that buyers do not take advantage of your inexperience.

Announcing a Sale is Difficult 
There is no easy or 100 percent effective way to put your business on the market. You might contact competitors or respond to some unsolicited offers. But you won’t get a clear assessment of value, and you may waste time dealing with unqualified buyers and window shoppers. Your investment banker can use their connections to find an appropriate list of buyers, without breaking confidentiality or scaring customers.

Most Middle Market Companies Lack the Necessary Staff for a Sale 
Middle market companies rarely have the resources required to run a sale, prepare financial documents, and market the company. Without these resources, they may provide a buyer with an incomplete and uncompelling portrait of the business. Investment bankers act as a for-hire M&A department for companies that are too small to have one of their own. This frees company resources, and ensures you run a professional-looking sale.

Hiring an Investment Banker Lends Credibility 
Working with an investment banker signals that you’re serious about selling your company. It shows buyers you’re not just hoping to get a valuation, and that you really do hope to sell. Sellers who hire bankers are invested in the process. Your investment banker also shows buyers that you will run a professional bidding process, and that they will not be able to take advantage of your naivete. This can help you get more attractive offers from better qualified buyers.

No owner can do everything on their own, especially when it comes to putting their life’s work up for sale. You might be an expert at running your business, but that means you’ve had little time to become a market expert. Channel the expertise of an investment banker to get the most out of your sale.

About Madison Street Capital
Madison Street Capital is an international investment banking firm committed to integrity, excellence, leadership and service in delivering corporate financial advisory services to publicly and privately held businesses. Over the years we have helped clients in hundreds of industry verticals reach their goal in a timely manner.

Our experience and understanding in areas of corporate finance and corporate governance is the reason we are a leading provider of financial advisory services, M&A, and valuations. With offices in North America, Asia and Africa, we have adopted a global view that gives equal emphasis to local business relationships and networks.

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