A&D Investment Banking: Questions to Ask Before Hiring an Investment Banker

Aerospace and defense investment banking continues to boom thanks to industry consolidation. But also, increased regulatory oversight and market contractions in anticipation of a recession loom large in the background. This makes hiring the right A&D investment banking firm more important than ever. It’s easy enough to review interview questions online and then trust your gut. But how do you really know you’ve hired the right investment banker for your needs? Asking specific questions that require documentation can help you assess whether you’re making the right choice. 

How many deals did you close last year, and in what industries? 

This helps you assess whether the banker is serious about your industry, or just a part-timer dabbling on the side. Knowing how many deals they successfully closed is also a great number to have, especially as compared to the number of contracts they took on. Because if they’re not closing any deals, they may not be giving their contracts their full attention. 

What are my business’s biggest assets and liabilities in terms of M&A? 

A savvy investment banker should be able to give you a thoughtful assessment of your business. Someone who just wants you money, by contrast, may offer a lot of bluster and false promises, but few tangible details. This question helps you weigh how carefully the banker has thought about the specific issues your business faces. 

Who can I talk to about their experience with you? 

Selling a business is a major decision. If you have a good experience with this investment banking firm, you’ll likely be willing to talk to others about it. The same is true of your investment banker’s past clients. If they can’t give you several recent references in your industry or a related industry, it’s a significant red flag. 

What deal structure do you advocate for, and how do you determine value? 

What matters here is not so much the specific answer, but that they have an answer. A good investment banker will give you specifics about the methodology they use in assessing your business’s value. They can also offer feedback on the type of deal structure they think is most likely to work well for your business. Pay attention to what they advise, and the path they say is most likely to get you where you need to be. 

Who will be working on my deal, and what will they be doing? 

It doesn’t matter how competent the firm is if you’re going to be working with an intern and a junior partner, or if the team only intends to devote an hour a week to your deal. Get very clear about what it is you’re paying for, and from whom. Ask also about the specific services you’ll get for your fees. Ideally, the investment banking firm should charge a success fee and a reasonable retainer. This incentivizes hard work, but reduces the risk that the firm will pressure you into a deal that’s not in your best interests.