Investment banking in M&A

In M&A, an investment bank (or independent advisory boutique) acts as a financial adviser, guiding clients through the origination, valuation, negotiation and execution of a transaction. Banks advise on either side of a deal.

Sell-side versus buy-side

• Sell-side advisory — the bank represents the seller, preparing marketing materials, identifying and approaching buyers, running a competitive auction, and negotiating to maximise price and certainty.
• Buy-side advisory — the bank represents the acquirer, helping source targets, value them, structure and finance the deal, and negotiate terms.

What advisers do

• Origination — pitching ideas and sourcing opportunities (the "pitchbook").
• Valuation — building DCF, trading comps and transaction comps to frame price.
• Process management — running the auction or negotiation and coordinating lawyers, accountants and other advisers through due diligence.
• Structuring and financing — advising on structure and arranging or advising on funding.
• Negotiation — supporting the client on price and terms.

Marketing documents

A sell-side process typically produces a one-page anonymous teaser, a detailed confidential information memorandum (CIM) for interested buyers under NDA, and a managed data room.

Fairness opinions

For public-company boards, a bank may provide a fairness opinion — a formal view on whether the financial terms of a deal are fair, from a financial point of view, to shareholders. It supports the board's discharge of its fiduciary duties.

Fees

Advisers are usually paid a modest retainer plus a much larger success fee, calculated as a percentage of the transaction value and payable on closing — aligning the bank with getting the deal done. Large banks are termed bulge bracket; smaller specialists are boutiques.