M&A SELL-SIDE PROCESSInvestment Bank Advisory · 4–9 Months · Fee: 0.5–2% of Deal Value1MandateEngagementSeller hires IB2CIMPitch Book3IOIsRound 1IB reviews IOIs4MgmtMeetings5LOIsFinal Bids6CloseSign & CloseSELL-SIDE IBAdvises the SellerBUY-SIDE IBAdvises the BuyerLAWYERSSPA · Due DiligenceREGULATORSHSR · CFIUSTypical deal fee: $10M–$100M+ · Largest deals: $500M+ in advisory fees
Module 02

Investment Banking

The art and science of advising corporations on their most important strategic and financial decisions.

Core Concepts

Investment Banking 101

The foundational knowledge you need to understand how investment banks operate and the value they provide.

What is Investment Banking?

Investment banks act as intermediaries between companies and investors. They advise on M&A, raise capital through debt and equity offerings, and provide strategic financial counsel.

M&A Advisory

IBs advise companies on mergers, acquisitions, and divestitures — representing either the buyer (buy-side) or seller (sell-side). They run the process, find counterparties, and negotiate terms.

Capital Markets

Two key divisions: Equity Capital Markets (ECM) handles IPOs and follow-on offerings. Debt Capital Markets (DCM) structures and sells bonds, loans, and other debt instruments.

Valuation Methods

IBs use DCF analysis, comparable company analysis (comps), and precedent transactions to determine what a company is worth. These form the basis of every deal negotiation.

Restructuring

When companies face financial distress, restructuring groups advise on debt renegotiation, asset sales, bankruptcy proceedings, and turnaround strategies.

Fees & Revenue

IBs earn advisory fees (typically 0.5–2% of deal value for mid-market M&A; mega-deals >$5B can fall well below 0.5%, while smaller deals may exceed 2%), plus underwriting fees for capital raises and trading commissions.

The Process

Anatomy of an M&A Deal

A sell-side M&A advisory process typically follows these five stages, often spanning 4-9 months from engagement to close.

01

Engagement & Strategy

The IB is retained by a client and develops a strategic rationale. For sell-side mandates, they prepare marketing materials including a Confidential Information Memorandum (CIM).
02

Buyer Outreach

The IB contacts potential buyers (strategic acquirers and financial sponsors). Interested parties sign NDAs and receive the CIM to evaluate the opportunity.
03

Indicative Offers

Buyers submit non-binding Indications of Interest (IOIs). The IB and seller evaluate offers based on price, certainty of close, and strategic fit.
04

Due Diligence

Selected buyers gain access to a virtual data room for detailed due diligence. Management presentations are held. Buyers refine their valuation and financing plans.
05

Final Bids & Close

Buyers submit binding offers (LOIs). The seller selects a winner, negotiates the definitive agreement, and works toward closing — including regulatory approvals.
Organization

Key IB Divisions

Industry Groups

Sector-focused teams (TMT, Healthcare, Energy, FIG, Industrials) that maintain deep client relationships and originate deals.

Product Groups

M&A, Leveraged Finance, ECM, DCM, and Restructuring specialists brought in for technical deal execution.

M&A Advisory Fees

Typically 0.5–2% for mid-market deals. On a $1B deal that's $5–20M. For mega-deals (>$5B), fees can drop well below 0.5%; for smaller deals (<$50M), they may exceed 2–3%.

Underwriting & Arranging

IPO underwriters earn 3–7% of capital raised; debt arrangers earn 1.5–3% of the loan size.
The Players

Bulge Bracket Banks

Goldman Sachs
J.P. Morgan
Morgan Stanley
Bank of America
Citigroup
Barclays
Deutsche Bank
UBS