Generally, they only do two things. And on an hourly basis, are grossly overpaid for it.

But it’s totally worth it.

A good M&A banker:

  • Give you the threat, sometimes even just the illusion, of a Second Offer. Of competition for the deal. Sometimes there really is a second suitor, for real (e.g., Salesforce and LinkedIn). But usually the second suitors aren’t quite real, if only because they rarely can move as fast as the party making the first offer. But merely having a banker telling the acquirer there are others in the mix will help get the price up and minimize issues. Companies just move differently in competitive deal situations than elective, non-competitive ones. A good banker will totally pay for herself here.
  • Deals with some of the tough issues. So you don’t break relationships. Tough issues come up around compensation, stay and retention packages, around escrow, around edge cases that people get their dander up, around your job after the deal, etc. If you are dealing directly with the other side, you’ll probably ruffle some feathers and break some glass. Not a great thing if you have to do work there after the deal closes. Let the banker handle these issues. They’ll negotiate better for you, and the broken glass will be theirs. Not yours.

Bankers usually can’t sell a company for you. You already have to have an offer, or a prospective offer. And they often don’t really get you a second offer. Or even work that many hours.

But what a good one does just on these two points is worth far more than what you pay them.

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