22 Oct How Investment Bankers Interpret Financial Markets
To achieve the best possible outcome when selling an online or digitally native business, it is critical to properly read and interpret financial markets. Doing so helps you understand how to best position and market your company, as well as how to identify the best time to launch the deal.
Just as it is always a good idea to exit your business while it is performing well, it is also wise to launch the deal when market conditions are most favorable. Financial markets are inter-connected throughout the world and movements and conditions in seemingly un-related parts of the capital markets can affect how much a buyer is willing to pay for your company. For instance, prospective acquirers may be willing to spend more acquiring your company if they can secure cheaper debit financing in a low interest rate environment.
Understanding how financial and capital markets influence one another will help you gain a clearer picture regarding how your Company will be received in the marketplace and help secure a better purchase price. That said, you can’t use what you don’t know. Even the most seasoned entrepreneurs, those who are intimately familiar with every aspect of their businesses from top to bottom, may not have the same depth of knowledge concerning financial markets.
Entire degree programs and career paths are dedicated to learning how to glean insights from the market data and develop a strategy based upon those insights, so it’s perfectly understandable that you may not have honed this particular skill while juggling the myriad responsibilities of operating a business. If that’s the case, don’t worry – an experienced Investment Banker can analyze the markets for you so that you can make informed decisions, all while helping implement strategy and deftly guiding you through each stage of a sale transaction.
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Selecting the right intermediary to represent you is the key to a successful exit. An Investment Banker possesses the education, training, and institutional experience to transform your hard work and preparation into an exit that is both maximized and optimized to meet your goals.
An Investment Banker’s role extends beyond that of advisor. They are also uniquely qualified to interpret financial markets, provide ongoing analysis and guidance, and execute strategies on behalf of their firm’s clients.
Experienced Investment Banks bring a team of experts who assist in marketing the deal and structuring the transaction. Using a sophisticated and strategic deal-running process, deep knowledge of financial markets, and an extensive network of connections, Investment Bankers help you plan and execute the sale of the Company, ensuring you the maximum value and structure.
Know What to Look For
When developing and implementing strategy, Investment Bankers look at four basic categories of financial markets: equity markets, debt markets, commodity markets, and currency markets. Every decision is informed by the understanding that these markets are interconnected.
In other words, a change in one market can have a material influence on another. The ability to read and interpret even the smallest of these changes or interactions is a core function of the Investment Banker’s role as intermediary. Insights gleaned from the market play a pivotal role in developing the most effective strategy for every given client or transaction.
Why It Matters
Deal structure is influenced by several factors, including but not limited to global market conditions and M&A trends. An Investment Banker will gauge each financial market’s performance and review all relevant deals closing in the space before determining the best deal structure and marketing approach.
For example, a U.S.-based buyer of a U.K. company with books in pounds sterling may wish to convert the financials to U.S. dollars. The Investment Banking team representing the seller would have to understand each financial market and the currency conversion rate to effectively market the deal and structure the transaction to accommodate the buyer’s preference.
Seemingly small details can make or break a deal. That’s why it’s important to engage an intermediary, especially if you don’t have a background in finance. An experienced Investment Banker has their “finger on the pulse of the market” and can leverage their expertise to achieve optimal results.
The Next Step
Global Wired Advisors is here to help you sell your Digitally Native D2C or FBA business. We are Mergers and Acquisitions specialists with over 50 years of combined experience in selling online companies. Try our Free Value Estimation Tool and see what your business is worth.
We are committed to providing institutional-caliber service while earning our clients the highest value for their most important asset. Our team is standing by – click here to speak with one of our Advisors today!