Fifteen things investment bankers won't tell you

1. They don’t like your company; no reason for us to say such a thing. Better to maintain the relationship and see how a company evolves.

2. That they don’t like your sector; ditto from number one. The criticism also isn’t constructive. You obviously do like the sector and are committing part of your life to it. Why wreck your passion.

3. That your projections are ridiculous (see below); we’ll guide you later however. Unrealistic projections only make you look bad, uninformed and show bad judgment. Better to under promise and over deliver.

4. That your valuation expectations are laughable (again, we’ll guide you lower…); nothing kills a deal faster than a sky high and unrealistic price. Get some competition going for your deal and then you’ll see more pricing flexibility.

5. That your competition is going to crush you; and we’ve listened to your competition. Investment bankers don’t need to project everything (research analysts do that).

6. That you aren’t a credible leader; saying so would kill any chance of a relationship should we change our mind or you prove us wrong.

7. That your business model doesn’t make the grade for investors they know; instead, I’ll tell you what performance metrics you need to meet over the next six months. Prove me wrong.

8. That you don’t know your market/product/industry/company well enough; Insulting at best. I’ve heard a twenty-five year old CEO explain his market so well I was speechless. We know true passion and understanding when we hear it.

9. That you have no options; I might be missing someone and certainly don’t know who you know. I’ve watched such companies continue to – shockingly on my end – continue receiving money from existing investors for what seemed like forever.

10. Their real pipeline; if we’re too busy we don’t look like we have time for your deal; not busy enough we look like no one values our services.

11. Whether or not they can get the deal done; if we don’t think we can we won’t take it; investment banking fees are mostly success based. If I spend time on your transaction I don’t have as much time available for other companies or for finding new opportunities.

12. What the market will do; as if anyone knows. Deal valuation, success, financing, etc can be dependent on market forces. I can provide an educated guess but not certainty.

13. That they can help you when they don’t think they can; again, this issues goes back to the reality that if I can’t get a transaction closed I don’t get paid. And I can work for free easily; but it doesn’t pay the bills.

14. That due to one of the above they can’t, and thus won’t, help you; investment banking is a relationship business. If I can’t help someone I try to refer them to someone who can. Companies grow and change. Perhaps one day in the future I can help.

And some things they will tell you

1. What doesn’t work in your business plan; better to add some constructive value than let a potential client walk away with nothing.

2. That your projections aren’t plausible and why; see number one.

3. Who might be interested in your company (but they might not give you an exhaustive list); why would you hire me if I don’t have a vision for and understanding of your company?

4. What they think you should do about your capital structure; we almost can’t help ourselves on this one. The topic is so interesting and moldable.

5. That you need a better CEO/CFO; investment bankers can’t be shy about delivering the tough message. Very often too much is at stake for us to punt.

6. That your deal, and all deals, are subject to market realities; none of us controls the realities of the market. It is an inherent risk in many transactions.

Megan Lisa Jones is an investment banker who works primarily with companies in the digital media, technology, gaming and other emerging industries. Her experience includes time with Lazard Freres, Needham & Company and Merrill Lynch. Her investment banking blog is at www.ibla.us; and she released a novel, Captive, in late 2010 (www.meganlisajones.com">http://www.meganlisajones.com">www.meganlisajones.com).

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