Five Banker Questions

A strategic framework for entrepreneurs to gather market intelligence from investment bankers, particularly useful before selling a company or entering a new market.

When to Talk to Bankers

• Start conversations 1 year before wanting to sell
• Use banker insights to identify weak points that need fixing
• Talk to bankers before entering a new space to understand market dynamics
• Applicable for businesses with few million in profit minimum

The Five Key Questions Framework

1. Recent Deal Activity

• What deals have gotten done recently in the space
• Understanding current market conditions and valuations

2. Outstanding Performers

• Which deals traded at highest multiples
• Why these deals commanded premium valuations
• Identifying unique attributes that drive higher valuations
• Understanding if timing or specific characteristics led to better outcomes

3. Failed Deals Analysis

• Which deals couldn't cross the finish line
• Major red flags that prevented deals from closing
• Understanding deal-breakers and how to avoid them

4. Buyer Landscape

• Who are the active buyers in the space
• Understanding buyer motivations and strategies
• Types of buyers (strategic, private equity, independent sponsors)
• Their post-acquisition game plans
• Understanding typical valuation multiples they pay

5. Hypothetical Valuation

• If my business did X,Y,Z, what would it trade for
• Getting specific feedback on your business trajectory
• Understanding what improvements would drive higher valuations
• Getting multiple banker perspectives to triangulate potential outcomes

Key Benefits

• Provides clear roadmap for improvements
• Helps understand market dynamics before entering
• Validates business ideas and potential outcomes
• More efficient than learning through trial and error
• Can learn more in 7 hours of banker calls than months of operation