Most founders never hire an investment banker until they need one, and by then they are already behind. The first time a founder engages a bank is often at the worst possible moment — inbound acquirer, ticking clock, no leverage.
1. A sell-side M&A process ($50M+ transaction value) 2. A late-stage private placement (typically $75M+ growth round or crossover round) 3. An unsolicited acquisition offer worth taking seriously 4. An IPO or direct listing
Below those thresholds — Series A or B rounds, small tuck-in acquisitions, secondary sales — bankers add cost without adding proportional value. Your lawyers, your board, and your existing investors can run those processes.
1. Run the process. Identify buyers, manage outreach, coordinate diligence, keep the process on a defensible timeline. 2. Create tension. Getting from one bidder to three bidders is worth 20-40 percent on the final price. This is the single biggest source of banker value. 3. Handle the awkward conversations. Price pushback, deal term negotiation, walk-away signaling — the founder should never do these directly with the buyer. 4. Provide market intel. What are comparable transactions closing at, who has capital deployed, which buyers are actually motivated.
What they do NOT do: pick your strategy, write your story, or replace the founder in front of the buyer. If the founder cannot compellingly tell the company story, no banker can fix that.
Bulge bracket (Goldman, Morgan Stanley, JPM). $75M+ deals. Deep buyer relationships across strategics and PE. Expensive and process-heavy.
Elite boutique (Qatalyst, Allen & Company, LionTree, Centerview, Evercore, PJT, Moelis). Sweet spot for $100M to $2B tech deals. Senior bankers stay on the account.
Sector boutique (FT Partners for fintech, Union Square Advisors, Raymond James, William Blair). Great for $50M to $300M vertical-specialist processes.
The lead banker. Is the pitch senior going to actually run your deal, or hand it to a VP after signing? Get this in writing.
Recent comparable transactions. Not 5-year-old logos. Deals in your category, your size range, in the last 12 to 24 months.
Buyer relationships. Ask them to name 10 buyers they can get to a first meeting within 2 weeks. Then verify.
Chemistry. You will spend more time with this banker over the next 6 months than with almost anyone else. If the fit is bad, walk.
Standard sell-side M&A fees follow a Lehman formula variant — typically 1 to 2 percent of transaction value, with minimum fees ($1-3M) that matter on smaller deals. Retainers of $50-150K per month are common and usually credited against the success fee. Late-stage financings run 2-5 percent of capital raised, tiered.
Tail period. 12 months max for buyers introduced by the bank; 6 months for buyers you already knew.
Success fee tiers. Ratchet the percentage up above target price to align incentives.
Legal counsel selected before the process starts — Wilson Sonsini, Cooley, Latham, Fenwick are the usual specialists.
Interview banks 12 to 24 months before you need them. Build relationships when there is no deal on the table. When the moment comes, you already know who you are calling, they already know your story, and you save the 60 days of pitch process that most founders lose because they started cold.
A great banker on a $200M sale is worth many multiples of their fee. A mediocre one on a $50M raise is a tax. Choose carefully and choose early.
