Investment Bankers advising on either side (Buyer or the acquiror) in an M&A mandate bring some intangible benefits to their clients in addition to the usual match-making, valuation advisory services etc.
1) Act as insulation intermediary
Dealing with due diligence questions, demands from either side (acquiror or seller) can be a daunting task especially as corporates are running their regular business simultaneously along with the M&A discussions.
Investment Bankers insulate the parties from this pressure to a certain extent by taking up the deal related workstreams and ensuring smooth and timely progress
2) Formal Process:
The entire process becomes more streamlined, formal in nature when a banker enters in the scene. CXOs do respect bankers and will adhere to the process suggested given the track record of their past wins with the Investment Bankers (mostly!)
3) Get “Better Price”:
The investment bankers can play the “bad cop” role and at times talk “tough” during negotiations and help the clients get better price. They can create an illusion of a “second offer” or meetings with other prospects to get better terms during negotiations
The higher the investment bank stands in the league tables, the more intangible value it tends to bring to the table and hence the high fees
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