Advisers: Choosing an Investment Banker
When it comes to choosing an investment-banking firm, many entrepreneurs assume they should settle for the most familiar name or any banker who shows interest.
Not Fred Marks. He's chairman of the board of Vermont Teddy Bear, a $20-million toy manufacturer based in Shelburne, Vt. After interviewing several investment bankers in 1993, Marks chose Barington Capital, a young New York City firm, to handle his company's $10-million initial public offering (IPO). Here's why he made such an unconventional choice:
· Barington's bankers offered creative ideas. "My plan had been to secure a bridge loan to tide us over until we were ready for an IPO," he recalls. "Barington's people argued that our financial shape was already strong enough and the timing was right for an IPO, given the strength of the market."
· The firm wanted his business -- and it was prepared to earn it. "Because they were new and growing themselves, our IPO was important to them," says Marks. "They planned to assign top-quality people to our financing effort and, as a result, projected that they could streamline the process." And they did: other bankers had told Marks that it would take six to eight months to take the company public, but with Barington the IPO took place within four months.
· Although Barington was young, its bankers had strong credentials. "Before hiring them, we checked our bankers out with other people on Wall Street and with some clients. We were confident that they had the skills we needed. And we were right."