The Finance Foundation
Reinventing capitalism for all
President of the Finance Foundation

In mergers and acquisitions, the investment banker is indispensable


          There is a new noise in town. Technology companies, big and small, consider that they do not need investment banks anymore. They can do everything by themselves.

         That is, by and large, preposterous. Not because the executives of tech companies are not very gifted. They are. But the success of a few deals nurtured in Silicon Valley does not mean that, in the reality of negotiations, buyer and seller will be able to put aside the presence of a neutral professional body. That is the rule of investment banks. Only investment banks can discuss between themselves and get to a common position. The seller has always an exaggerated value target and the buyer the opposite position. The banker is here to smooth and allow a final deal.

         Facebook, Google, Apple are able to buy small outfits, for big money. Alone.

         But when they will come back to complex deals, they will select their banking advisors again.

        That being said, there is a growing reality in the fact that tech companies can do it alone. Technology is more and more present in finance. It will be even more in the future. It allows knowledge of the companies and the markets, unknown till now. That will certainly reduce the role of the investment banker. But again, at the end of the day, he is an indispensable go between. 




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October 25, 2018 , Michel Gabrysiak
August 17, 2015 , Michel Gabrysiak