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INTERVIEWING ADVISORS
Before selecting a deal professional, review a variety of firms and then conduct extensive interviews. Be patient. After all, you will probably rely heavily on outside advisers for your buyout deal. Although talented professionals don't come cheap, always remember this: It's more expensive if a deal fails.
The interview itself should be free. It should make clear whether you and the adviser have personal chemistry. You want a person who is easy to talk to and with whom you could work for many hours. At the same time, you don't want a pushover. You want someone who will persuasively pursue your interests and get you the best possible deal. In other words, someone who seems to have good sales abilities.
Here are some things to ask when you interview CPAs, attorneys, or investment bankers:
How are you compensated? Can you estimate the costs of this transaction? As stated above, investment bankers get monthly fees plus a percentage of the closed deal. Attorneys usually get hourly fees and sometimes equity participation. CPAs can get only hourly fees. When asking each professional about the cost estimate, also get an outline -- on a month-by-month basis -- that shows what types of services will be performed and roughly how long it will take.
Will you be the one handling the case, or will it be a team? If so, who would be involved, and can I interview them, too? Make sure you talk to the person who will spend the most time on your deal.
When was the last time you handled a deal like this? Do you focus on similar types of deals? What are some examples of past deals? Make sure the professionals have done a deal in the past month and at least three over the past year. It is important that these deals be in your industry. Each industry has its own unique aspects -- in terms of valuation, regulations, and standards. You are paying lots of money for professional services, and you do not deserve a rookie. You should demand experienced professionals.
Have you had any disciplinary actions brought against the firm? If so, for what? Stay away from professionals who have any infractions. You do not want your deal to be complicated by an adviser who's lacking in ethics.
Can you provide any client references? Get at least three references. And they should be in your industry. Ask the former client, Would you use this adviser again? What were their strengths/weaknesses? Do they understand the industry? Do you think you got a good deal? How responsive were they?
