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In 2006, when hospital system HCA went private via a $33 billion management leveraged buyout, the largest in history at the time, Merrill Lynch Healthcare Investment Banking Group acted as financial advisor to HCA through the process, likely increasing HCA shareholders’ return. Likewise, when Piper Jaffrey represented insulin manufacturer Animas Corporation in its 2006 cash-for-stock purchase by LifeScan, Inc (a subsidiary of Johnson & Johnson), the investment bank’s involvement arguably gave Animas Corporation shareholders a competitive edge to find the right buyer at a healthy price.

Utilizing an investment bank is not necessary for all companies in all transactions, but an investment bank can help the seller successfully market the business and attract the right potential investors/buyers and ultimately can result in not only a more lucrative deal but a resulting transaction that otherwise meets the seller’s goals. Assessing which investment bank is right for a seller can be a daunting process, but there a few key questions that you as the seller can pose to your leadership when evaluating the various banks in order to find the bank that will ultimately meet your needs.

Ask yourself the following:

1. How well versed is the investment banker in your particular industry? Not only are there investment banks that specialize in healthcare (either boutique investment banks that focus on healthcare or healthcare divisions of larger more diverse investment banks) but some investment banks have specialized experience and knowledge about a particular industry within healthcare such as surgery centers, imaging facilities, etc. Working with an investment bank that understands the complexities of your industry enables the bankers to jump right into a transaction without the need for you to educate them about your industry or to explain basic fundamentals about your business.

2. Does the bank understand your individual company as an entity with a unique model, management team and philosophy? Have they taken the time to get to know your corporate culture and special aspects of your product and service delivery and do they appreciate the ways in which your company differs from your industry competitors?

3. Is investment banking a main focus of the company? We generally caution people against hiring parties to do investment banking services where this is not a core part of their efforts. For example, one client hired a general accounting/consulting firm a few years ago to help sell its specialty pharmaceutical business. Investment banking was a newer business line for that firm. After months without good results, the client hired a company that does focus in investment banking and in part in healthcare and had much better results: i.e. the client ultimately completed a transaction which exceeded essentially all of its targets.

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