HOW DO YOU PICK THE RIGHT INVESTMENT BANK? Of course, at FOCUS we believe we have a solid answer based upon our firm’s well-defined strengths.

But sometimes it also is useful to examine the question objectively. Below, you’ll find an article from Corporate Board Member which explores the same topic: “How to Pick the Right Investment Bank.” It’s full of sound advice from a fresh perspective, identifying the “right” characteristics to consider when selecting an investment banker to guide your company’s financial future and corporate development. We’re pleased to observe that the article also supports much of what we’ve been saying about FOCUS. We hope you agree.

Please feel free to forward this newsletter to friends, colleagues, and networking contacts. (Go to www.focusbankers.com for newsletter archives.)

Active FOCUS Deals
With over 25 years of experience across many verticals, FOCUS currently has nearly 60 active transaction engagements in its four offices in Atlanta, Chicago, San Francisco, and Washington, DC in the following specific business sectors.

• Asset Management
• BioScience
• Building Materials
• Business Process Outsourcing (multiple assignments)
• Business Services
• Call Center Software and Services
• Construction (Infrastructure)
• Consulting
• Distribution
• Energy
• Engineering
• Financial Services
• Fire Protection
• Food Processing
• Food Service Management
• Government Contracting (multiple assignments)
• Healthcare Business Services
• Home Automation
• Information Management
• IT Outsourcing (multiple assignments)
• IT Services (multiple assignments)
• Library Services
• Manufacturing
• Maritime Shipping
• Market Research
• Media
• Medical Devices (multiple assignments)
• Medical Diagnostics
• Medical Staffing
• Printing
• Retail
• Security
• Software (multiple assignments)
• Sports Apparel
• Telecommunications
• Transaction Management Services
• Truck/Transport Capital Equipment

Our transaction process provides us with up-to-the-minute market knowledge in these sectors. Are any of them of corporate development interest to you? Give us a call or drop us a note.

Inquiries should be addressed via e-mail to info@focusbankers.com, by telephone to 202-470-1973 or by fax to 202-785-9413.

How to Pick the Right Investment Bank

Look for a banker who really knows your industry and who'll snare investor interests in your company during a road show, after the IPO -- and always

Are you shopping around for the right investment bank? Bear this in mind: “The job of investment bankers is to get the order, so they’re selling. They are very high-class, sophisticated salespeople, but at the margin, they’ll be optimistic about what they can do for you,” says a director of three public companies and founding partner of a private equity firm in New York City. In a transaction-oriented business like investment banking, this isn’t too surprising -- but when you are interviewing bankers to help navigate an initial public offering, a merger, or a sale, it helps to be straight on the motivations of the players.

Look for a Firm That Can Do a Deal Smartly and Efficiently

The first thing you want in a bank is competence -- a firm that can get your deal done smartly and efficiently. To improve the odds of that, narrow your search to bankers who know your issues as well as they know their own children. Can they talk knowledgeably about who the likely investors are or which targets you should be sizing up for an acquisition? It helps if they have a successful track record with other companies like yours.

Your gut can take you only so far. Ask for references and check them thoroughly. In fact, don’t wait for the bank to provide you with introductions; cold-call CEOs and CFOs of its client companies and inquire about the deals the bank claims to have done. Ask how everything turned out. “You need to get a sense for what’s being said about the firm. Was it included in high-profile deals or was it passed over? Did it walk away from deals?” says Andrew J. Sherman, a Washington, D.C. attorney and co-founder of Grow Fast Grow Right Enterprises LLC.

Input from board members also can be especially useful, because a director may have dealt with the banking firm in other transactions or know someone who did, and can find out what went right or wrong. In the end, says a senior managing director of a private equity firm in New York City, “the board makes its decision about who to hire based on a confidence level that these bankers can execute for them.”

You are likely to be biased in favor of hiring one of the widely known national companies, because they are jacks-of-all-trades with reputations for getting their deals done. If you have never been in the market before, you will benefit from the halo effect of sponsorship by a big name as well as from the banker’s know-how on pricing, access to investors, and research coverage.

Bigger is Not Necessarily Better

For specialized transactions like mergers or spin-offs or going private, bigger is not necessarily better. These are strategic issues, and the judgment of a wise head that has seen a zillion companies like yours can be more important than the size of the firm. Says attorney Lewis B. Kaden, a partner at Davis Polk & Wardwell in New York City and a director of Bethlehem Steel until that company’s assets were sold: “Boards want good objective advisers, and that pushes them toward the senior person in a big firm or the one who has left to form a boutique. You go with the individual.”

Make Certain You'll be Working with a Senior Banker

Whether you hire a big firm or a boutique for your transaction, make sure that the person who is actually going to be your banker has senior rank. Sometimes this person is part of the team pitching for your business, but frequently the man or woman who seduces you with the glittering wonders of the bank hands you off, once you’ve succumbed, to a worker bee who will actually do the deal. Ask to meet this person and inquire about his or her seniority. You don’t want a junior banker, however talented, because your deal may require him to call on other resources of his firm and you want to be sure his requests will be heeded.

The person taking primary responsibility for your transaction should be accessible, knowledgeable, and driven by a personal, as opposed to perfunctory, interest in your company. Don’t hesitate to come out with blunt questions for him or her, such as “If I call you at 7:15 in the morning, how soon will you return my call? How often am I going to hear from you?” If you don’t like this person, you’d better say so even if he or she is very senior in the firm. Take a pass, provided you have another firm lined up that is as good.

Base Your Choice on the Specifics of Your Transaction

Assuming that all the bankers soliciting your business have leaped those general hurdles, you then have to make choices based on the specific needs of your transaction. If you are going public, you want two things: coverage of your company by the firm’s analysts after it is public, and a commitment from the firm to support your shares in the aftermarket.

When Wayne Shaw, a professor of corporate governance at Southern Methodist University’s Cox School of Business in Dallas, looked into why companies switched underwriters after their IPOs, he discovered that they usually did so not because they were dissatisfied with the way the IPOs had gone, but because they wanted to trade up to more prestigious banking firms and receive better research coverage. Despite the black eye that Wall Street analysts got early in this decade from colluding with their firms’ investment bankers, it’s still hard to overstate the value of research reports to an issuer.

Seek Effective Marketing and Negotiating Skills

Mergers are more complicated. You need someone who can find interested parties, market you effectively, and negotiate the price. Be wary of conflicts. Does the firm you want to hire also do work for your competitors? This is a double-edged sword, because if they deal a lot with your competitors they’re knowledgeable in the space and you like that.

But who will be the first to see any company that might want to merge with yours? You? Or that other outfit that’s been trying to cut your throat? Ask the banker if there is any future work in his in-box that might detract from the amount of time he’ll devote to you, and how he proposes to handle that. What happens if you and another of his clients find yourselves in conflict? Or if it turns out that he’s working for a company you make a pass at? It has happened that one banker represents both the buyer and the seller in a deal and everybody walks away happy, but that is not an ideal situation. Make the bank spell out its rules on conflicts of interest.

Originally published in the Jan./Feb. 05 issue of Corporate Board Member magazine, and reprinted with permission. Portions of the original article have been omitted.

FOCUS Adds a Partner in Washington DC and a Director of Business Development in San Francisco

FOCUS Enterprises, Inc., a national middle market investment banking firm providing merger, acquisition, and corporate finance services, is adding two new executives: a Partner, Richard Thomas, who will be based in the firm’s headquarters in Washington, DC headquarters, and a Director of Business Development, Laura Russell-Jones, who will support the Western Region in San Francisco.

“Attracting such remarkable talent to the FOCUS team adds depth as we continue our expansion,” said Douglas E. Rodgers, Chief Executive Officer of FOCUS. “Rick Thomas brings a wealth of experience in businesses ranging from aerospace, software, and manufacturing to financial, marine, and food services with deep experience in buy side transactions. Adding a communications and business development professional of Laura Russell-Jones’ caliber will be a great asset to the Western Region. Laura’s experience serving the investment banking and financial services markets in London and Paris bring a new dimension to our firm.”

About Richard Thomas
Prior to joining FOCUS as a Partner, Mr. Thomas served as the Vice President at VSI, a boutique investment banking firm in Washington, DC, leading projects with MCI WorldCom, Arthur Andersen, EDS, and The United States Agency for International Development. As an adjunct faculty member at The George Washington University School of Business and Public Management, Mr. Thomas has lectured to hundreds of executives on M&A best practices...more

About Laura Russell-Jones
Prior to joining FOCUS as Director of Business Development supporting the Western Region, Ms. Russell-Jones lived in London and managed the sales efforts of Euromoney’s Corporate Finance Magazine, a specialist publication for CFOs, finance directors and corporate treasurers. She also was Director of Business Development for httprint, a bricks and mortar and online printing company...more