Questions to Ask an Investment Banker
Questions for a founder or owner meeting an investment banker about a sale, a raise, or an acquisition, covering mandate scope, fees, valuation method, conflicts, and how the process will actually run.
The questions
Open any question for the note
What kind of mandate are you pitching for here: a sale, a raise, or something else?
Why ask it
Bankers pitch the mandate their group is staffed to run, not always the one you came in for. If their description of the job keeps drifting from yours during the first meeting, expect the same drift when the engagement letter is drafted.
Which deals you closed in the last two years look most like mine?
Why ask it
You want closed deals at your size and in your sector, not a logo wall. Vague answers, or examples that are all much larger, usually mean your deal would be the smallest file on the desk.
Who from your team will be on this day to day?
Why ask it
The senior banker in the room often hands the work to an associate after signing. Ask for names and get the day-to-day contact into the meeting before you commit.
How do you get to a valuation range for a company like mine?
Why ask it
A useful answer names the method and the inputs: comparable transactions, an earnings multiple, the adjustments they would argue for. An answer that is only a number, with no explanation of what moves the top and bottom of the range, is a pitch rather than an analysis.
Who would be on your first call list of buyers or investors, and why those?
Why ask it
This tests whether they have a thesis about who wants your business and why. Watch for a list that is just the obvious strategic names anyone could assemble from a trade publication.
When did you last speak with the people on that list?
Why ask it
Relationships are the product you are paying for. A banker who spoke to those acquirers this quarter is worth more than one who covered them five years ago.
What is your fee structure: retainer, success fee, and how is the success fee calculated?
Why ask it
Get the base the percentage applies to, not just the percentage. Enterprise value, equity value, and value including earnouts or assumed debt can differ by a wide margin on the same deal.
What outcomes trigger your success fee if the deal changes shape?
Why ask it
Deals turn into minority investments, recapitalizations, or asset sales. You want to know now which of those the banker gets paid on, and at what rate.
What expenses do I cover on top of the fee, and is there a cap?
Why ask it
Legal support, data room hosting, travel, and printed materials get billed back. Ask for a cap and for written approval above a set amount.
How long is the engagement, and what is the tail period after it ends?
Why ask it
A tail clause means you owe a fee if you close with a contacted buyer months after the mandate expires. The length of the tail and the definition of a contacted party are both negotiable, and worth negotiating.
Does your firm have any relationship with the likely buyers, including lending to them?
Why ask it
Financing the buyer while advising the seller puts the firm on both sides of your price. Ask them to disclose it in writing rather than describe it verbally.
Who inside your firm will see my financials, and how is that information walled off?
Why ask it
You want a named list and a description of how research, trading, or other coverage teams are kept out. If the process sounds informal, assume your numbers travel.
What will you need from me and my finance team, and how much of our time will it take?
Why ask it
Sell-side processes run on the seller's data, and the burden falls on whoever closes your books. A banker who has done this will quote you real hours per week and name the documents.
Walk me through the timeline from signing you to funds arriving.
Why ask it
Listen for the stages they treat as slow: preparation, buyer diligence, financing, regulatory clearance. A banker who quotes one round number without stage detail has not thought about your specific deal.
Where in my business will a buyer's diligence team push hardest?
Why ask it
A good answer is uncomfortable and concrete: customer concentration, add-backs to earnings that will not survive scrutiny, a key person with no contract. If nothing comes up, they have not read your numbers closely.
What would you tell me if your valuation view is lower than the number I have in my head?
Why ask it
You are asking whether they will hold a line under pressure. Bankers who win mandates by agreeing with the owner's number tend to renegotiate expectations downward after the fee is signed.
What would make you advise me not to run a process right now?
Why ask it
Every advisor should be able to name conditions that argue for waiting: an unfinished audit, a customer renewal in doubt, a buyer set that is between funds. Nobody who cannot name any is giving you advice.
How do you handle a bidder who tries to cut the price late in the process?
Why ask it
Late retrades are common, and the answer shows their tactics: keeping a second bidder warm, structuring deposits, setting deadlines. Vague reassurance is a warning.
Tell me about a deal of yours that went badly, and what caused it.
Why ask it
The answer separates people who have run hard processes from people who have only pitched. Blaming the client entirely is worth noticing, since you would be the next client.
If I hired you today, what would you want fixed before we go to market?
Why ask it
This turns the meeting into free advice and shows what they noticed. Specific asks, such as cleaning up contracts or restating a year of accounts, tell you they have already done work on your file.
Choosing and using a banker
Practical guidance for the conversation itself
How to run the meeting
Meet at least three firms
Pitches only become readable when you can compare them. Ask each firm the same fee and valuation questions in the same order so the differences are about them and not about how you asked.
Separate the pitch from the fee letter
Enthusiasm in the room is free. Read the engagement letter with your own lawyer, and mark the fee base, the tail, the expense cap, and the exclusivity language before you discuss anything else.
Ask for the deal team, not the pitch team
Request a second meeting with the people who will do the work. If the firm resists putting them in front of you, that is the answer.
Fee terms worth pinning down in writing
- The exact base the success fee is calculated on, including whether debt, earnouts, and rollover equity count
- Whether the retainer is credited against the success fee
- The fee treatment if the outcome is a minority investment or a recapitalization rather than a sale
- Tail length after termination, and the definition of a contacted buyer
- An expense cap and a threshold above which you approve spending
- Exclusivity: which transaction types are carved out so you can act on an inbound offer
Common pitfalls
Hiring on the highest valuation quoted
The number in a pitch costs the banker nothing. Weigh the reasoning and the buyer list instead, and ask each firm what would move their range down.
Signing before the data is ready
Going to market with unreconciled accounts or unsigned customer contracts invites a price cut during diligence. Fix the file first, even if it delays launch by a quarter.
Leaving conflicts undiscussed
Ask directly about lending relationships and other mandates in your sector, and ask for the answer in the engagement letter rather than in conversation.