Investment Bankers

Investment Bankers are individuals who represent a company when they are seeking to raise money in the public or private marketplace. Keep in mind investment bankers are working on as many as a dozen different deals at any given time. Many of these firms specialize in certain industries or types of deals they will consider. The average investment banking firm sees over a 100 deals a week.

Their job is to present your deal to a variety of funding sources. Most of their funding sources have very rigid criteria as to the terms and conditions of their financings and the minimum and maximum amounts they will fund.

Because the investment bankers do see too many deals it is imperative that you have a business consultant representing you that has previous contacts or relationships with these firms. If you don’t have representation your deal will never get an opportunity to be reviewed. The investment bankers look to the consultants they trust to show them only the deals that meet their criteria for funding. Most of the firms are particular about which company’s they accept, but they do a very good job at getting their deals funded because if the deal doesn’t get funded, they don’t get paid.

Just because an investment banker takes you on as a client is no guarantee that your deal will get funded. As it states in the mutual fund brochures “past performance is not an indication or guarantee of future performance”. However, if you can find an investment banking firm that previously funded a company in your industry and the company’s stock performed well after the funding you have a good shot at having them be successful in raising you the capital you seek.

The average fee for raising capital today is usually a combination of 10% cash compensation plus 10% warrant coverage. A warrant gives the investment bankers an opportunity to cash in on the company’s stock if it appreciates in value after the company goes public.

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