When it comes to the world of finance, there are usually two parties that are involved-
- One that has the money and wants to invest the same for growth.
- Two that want the money to grow a business and return the gains
Traditionally, investment banking was all about connecting these two parties (the one with money to the one that wants it). The end game was all about growing the money and generating high growth margins that made investors and shareholders happy.
Investment banks and bankers perform a lot of additional functions over and above what we just mentioned in the last paragraph.
Everyone from successful tech professionals to billion-dollar legacy companies and family funds hires investment bankers to help them grow their wealth.
In this resource article on investment banking, we are going to look at seven major factors that you should consider when hiring an investment bank to grow your wealth.
List of 7 Factors to Consider When Hiring an Investment Bank
1. Consultation services on real-time financial transactions-
While it is true that some investment decisions require months of strategic planning, others need to take in real-time.
A major portion of what investment bankers do is suggest and consult on opportunities that can help generate real wealth and value for the investors.
Getting the best consultations based on the latest and best knowledge about financial markets is a factor that you need to consider when hiring an investment bank or banker.
2. Idea, experience, and education on M&As and Partnerships-
With the emergence of the startup community, mergers and acquisitions have become routine features for bigger companies.
They are constantly looking at tying up with other businesses, entering into strategic partnerships or forging collaborations.
Investment banks are the ones that get the legal paperwork done, set up the terms and conditions and ensure a mutually conducive method of working. They keep the financials as transparent as possible.
3. Access to resources and financial capital for investment-
One misconception is that it is only individuals and businesses that have money that reaches out to investment bankers. Not true.
There are many entities that need money that reaches out to them. As we mentioned before, investment bankers have access to a large volume of cash assets.
They connect the ones that have the cash with the most promising ones that need the cash. They need capital to invest in new tech, enter into strategic partnerships, and so on.
4. Experience in financial transactions, M&As, and other services-
Hotshot young investment bankers wearing Saville Row suits look pretty only on the silver screen.
The ones that you want to work with should have salt-and-pepper hair, own penthouses on Madison Avenue and would have handled billions of dollars worth of transactions in their lifetime.
When it comes to investment banking, it is all about the experience. The more experienced the banker, the better they will be able to handle your portfolio. It is as simple as that.
5. Diversity of handling different investment portfolios for clients-
The world and its financial markets are changing faster than you can take a single breath. Investment bankers have their hands full with the emergence of Cryptocurrencies.
Everyone wants a piece of the action, high growth, minus the risks, and record fall!
This means that an investment bank or banker that has experience in handling different types of portfolios is a factor that should be considered. Diversity translates into more opportunities for growth.
6. Does the investment firm fit into your overall philosophy and ethos?
Do you want to make money at all costs, or do you have certain principles in place that you want to follow?
This is why you need to explore whether the investment bank or banker that you are considering is a good fit for your business or not.
You need to be comfortable about disclosing your financials, discussing your intentions, and telling them about some of your deepest financial secrets. If they are not a great fit, you are going to get into problems.
7. Commission, fees, and staffing in the investment baking firm-
Last but not least is the money factor and whether they will be able to dedicate committed resources to your account.
When it comes to hiring investment bankers, try to stay avoid the ones that are going to quote you the lowest price.
Here, the fees charged are directly proportional to the quality of work you are going to get. Higher fees are often commensurate with someone that is going to help you earn a lot of money.
The Final Takeaway
Choosing an investment bank and banker might be the best or worst decision of your life. Many joke that this is very similar to choosing a life partner. You hope for the best and do your due diligence, but unfortunately, sometimes, it just doesn’t work out. If you have any more questions, please let us know in the comments section below.
Interesting Related Article: “What is an investment bank? Definition and meaning“