Growth Partners successfully competes with large “brand-name” investment banks. The key distinctions between our firm and large traditional investment banks outlined below showcase our superior approach resulting in superior client outcomes.
Traditional Processes vs. Proprietary Practices & Strategic Expertise
Traditional investment banks employ traditional transaction processes to execute a transaction. The process includes creating information that describes a company, assembling and soliciting a buyer group, managing an auction process to create a competitive dynamic and negotiating the best outcome. The “content” related to each of these elements is fairly standard with relatively modest variations from firm to firm.
In contrast, we have developed proprietary practices related to these process elements, aside from incorporating our strategic expertise into our transaction engagements. The information we assemble is oriented directly towards the buyer’s primary consideration, which is “what could be vs. what is.” The buyer group we assemble is based on selecting parties that might derive the greatest synergistic benefit, in contrast to only pursing similar companies. We have special negotiating tactics that have proven to be especially effective. We do provide a different and better process.
Fragmented Teams vs. Concentrated Engagement
Traditional investment banks possess a division of labor and apply a team to process a transaction. On average, this encompasses a young analyst to prepare the core materials, a junior person to engage the interested parties in the marketplace, and a senior banker to manage these individuals, receive and relay updates to the client, and handle final negotiation matters. As a result, imperatives exist related to maintaining uniform quality and cohesion among the team members. The reason for this structure is addressed in the next distinction.
In contrast, Growth Partners does not have such an extended “conveyor belt” approach. Rather, the senior banker is integrally involved in preparing information, engaging the marketplace via counter-party interaction, and maintaining a close and immediately informed relationship with the client. The senior banker will have an assistant to assist with administrative matters such as information collection, the arranging of conference calls, etc., but the senior banker’s role with any transaction or client is much more concentrated.
Transaction Quantity vs. Transaction Quality
Traditional and large investment banks are built to process a large volume of transactions based on the personnel structure and the overhead. There is an imperative to engage and execute as many transactions as possible thereby placing a premium on quantity. Moreover, the closure rate goal is about 65% based on the relative deal activity and cost structures of such firms. As a result, while clients may feel comforted by a large investment bank enjoying a high transaction volume, the issues of attention and quality remain.
In contrast, Growth Partners constitution and approach are predicated on quality. We are neither built to handle a large volume of transactions, nor is this our interest. Rather, we are dedicated to providing the highest level of transaction quality. This is a hallmark of our brand, and we think this serves our clients best. As a result, we are selective with our client engagements since we handle a discrete number of transactions per year. Moreover, our success rate, or closure goal is 100% based on the intensity of our focus with our clients. Simply, we favor quality over quantity.
Specialization vs. Specialization Plus
Traditional and large investment banks are organized around specialization such as industry-specific, and/or transaction-type specialists. This is a product of scale and efficiency. As a result, most bankers possess a deep, but narrow orientation. This typically produces “client comfort” knowing that the banker does nothing but execute transactions within his or her specialty. However, the counter-arguments include whether: 1) a banker will “stress” industry relationships for the sake of a single client, 2) a better outcome could be achieved by a cross-fertilized orientation, and 3) the new efficiency of databases precludes “knowing” who the key parties are (“knowing” the key parties is an antiquated position). Lastly, the issue related to banker quality, as expressed by producing satisfactory vs. exceptional results, always remains.
In contrast, Growth Partners does maintain certain industry specialties via eight industry groupings thereby creating depth within key industry groups. There is probably not an industry within which we have not accomplished important outcomes. In addition, our transaction orientation is diversified, and this is relevant in regard to anticipating a buyer or counterparty’s actions, modeling, prospective returns, etc., as all of this impacts many factors like the payment of premiums, capitalization parameters, the probability of an all cash transaction, etc. Moreover, our specialized strategic expertise affords the ability to understand a company and its potential to a degree well exceeding any industry specialist. This expertise enables us to create and quantify a build-plan which provides leverage in regard to valuation and consideration exchange negotiations. In summary, we believe our formula related to industry specialization, transaction diversification and the use of special build-expertise will produce a superior transaction outcome.
Employee vs. Entrepreneurs
Traditional investment banks employ investment bankers. Investment bankers join firms to benefit, in large part, from the established marketplace profile or brand of a firm that may attract a large volume of transactions per year. The primary benefit for the banker is to profile the firm’s standing for purposes of being able to establish, through association, his or her own creditability with a prospective client to win business. This enhances the banker’s chance of being successful, but does not afford the prospective client with any special insight about the banker’s capability.
In contrast, Growth Partners was founded by an entrepreneur, and its representatives are entrepreneurs and business owners. This is relevant and meaningful because, by definition, an entrepreneur possesses the conviction, and usually the validated conviction based on market acceptance, that his or her offering is better, or more effective that the traditional alternatives that exist. Growth Partners has individuals that had the courage and resolve to put their capability to the test by successfully competing with the status quo. We are a different breed of professionals.
Please refer to an article titled “The Value of an Investment Banker: How to Choose Wisely” provided within the Investment Banking section of this website. This article outlines a selection methodology, a listing of key attributes and red flags, and highlights the conclusion that a client does not hire an investment banking firm, but rather, the person who walks through the door.