Patience is an Important Trait in Investment Banking

By: Robert Goodman

The business of investment banking is complex in many facets – it runs at a pace where quite a lot seems to happen at once and yet the deal process can be a long game…a very long game. Being an investment banker is about the willingness to make a trusted advisor relationship with a client prospect, sometimes years ahead of a potential sale.

Before investment bankers can be dealmakers, they must be relationship-makers. That is, they must work to become trusted advisors, immersing in the business of a prospective client and offering advice, guidance and connections that may one day make the company an attractive acquisition target. When engaging with companies far before they are even considering a sale or a capital raise, patience emerges as a crucial trait for the investment banker who is willing to be a sounding board for entrepreneurial organizations that have selling the business on their horizon.

While investment bankers may lead transactions, skilled investment bankers are never transactional when building relationships across the industry sectors they serve. Successful investment bankers recognize the importance of taking the long view, seeing the big picture, and establishing connections with companies even when they are not actively seeking an exit plan or driving toward a liquidity event. By doing so, bankers position themselves as allies and advocates rather than mere deal facilitators. Nurturing a relationship with a business that one day may be ready to go to market positions the investment banker to cultivate additional high-value connections that will help the business achieve an optimized valuation when the time for a sale arises. In the interim, the investment banker has a wealth of knowledge to impart to the business. By offering guidance and resources to empower an entrepreneurial organization to elevate its operational strategy, customer/client base, and key industry alliances, an investment banker is often rewarded with loyalty from that company to take it to market, identifying the ideal M&A opportunity that aligns to achieve the company’s quantitative and qualitative objectives.

The Journey to a Sale

Companies typically go through various stages of growth and transformation before considering a sale or any significant financial transaction. A patient investment banker recognizes these stages and understands that timing is crucial. Instead of focusing on a near-term opportunity or advising a prospect to sell prematurely (before optimal valuation can be achieved), a wise investment banker devotes time to fully understanding a potential client’s business, growing a relationship with the leadership team, offering advice, and even opening doors to new relationships that will help the company mature towards an eventual sale. Further, an investment banker who is both intellectually and emotionally intelligent will stay informed about industry trends and potential challenges that could have a material impact on a prospect’s business, its market position, and its valuation. That investment banker becomes a sounding board when the company finds itself navigating choppy waters.

Building Trust and Credibility

Patience in relationship-building with prospects allows investment bankers to elevate their credibility and earn the trust of many businesses. By demonstrating a commitment to a company’s long-term success, bankers become valuable partners rather than opportunistic vendors. When the client eventually reaches a stage where financial advice is needed or a transaction appears an attractive option, the investment banker that has been a trusted advisor frequently becomes the preferred M&A advisor.

Strategic Advisory Role

Exceptional investment bankers don't just react to current market conditions or immediate needs -- they proactively offer strategic advice. By nurturing relationships over time, bankers gain a deep understanding of a company's goals, challenges, and vision. Positioning themselves to provide tailored advice that aligns with the client's long-term objectives, builds trust and rapport.

Mitigating Risks and Challenges

Patience allows investment bankers to identify potential risks and challenges well in advance. By cultivating a relationship with a company before it is ready to sell, bankers can work alongside the future client to address issues, strategize for growth, and implement measures that enhance a company's market position.

For the investment banker, patience is not simply a desirable character trait, it’s an authentic strategic advantage. Building relationships with companies far before they may even contemplate the prospect of a sale requires a forward-thinking approach and a commitment to the prospective client’s future success. The investment banker who embodies patience in relationship-building becomes a trusted partner, offering strategic insights and guidance that extend far beyond an immediate deal. It is this quality that sets apart exceptional investment bankers and ensures lasting success for both clients and advisors alike.