Don’t Rely on Investment Banks for Valuation

Abstract

Investment banks play an important role in the M&A world. Although investment banks are a necessary part of transactions, we argue that they should never be used to establish valuation. In this chapter, we discuss the incentives, fee structures, and the role of investment banks in closing successful deals. For the managers of companies preparing for an M&A, it is critical to understand the key pillars of valuation and value creation. Otherwise, they will not be informed contributors to the discussion.