Firm Update: August 2023

Welcome to our August Broker-Dealer Newsletter. 

I share some updated thoughts as to deal best practices in this August 2023 market environment. Then, Michelle Mueller will provide compliance updates, and Zaya Bold will do so for collaboration.

To all of our success!

Deal Best Practices in the Current Market Environment

In these 2023 “mixed markets,” characterized by both challenging and favorable deal closing conditions, there remain critical differentiators between bankers that consistently close deals and from those that don’t.

These include:

#1. They Work on Big Deals. Perhaps obvious, but many years of mandates and deal closings data on the GTS platform show that the likelihood of a mandate progressing to a transaction close is directly correlated to the size of the deal.

By example, over the past 2 years, approximately 20% of mandates spun up on the platform had expected transaction values of greater than $50 million. And more than half of these progressed to a transaction close.

This compares to the remaining 80% of mandates with expected transaction values of less than $50 million – of this group, approximately 25% progressed to close (50% less likely).

Of course, sourcing and winning larger deals is challenging – and that a very good living can be had working market niches involving smaller transactions – but the fact remains that the bigger the deal, the more likely it is to close.

#2. They Maintain a Strong Industry and/or Product Focus. This has been an ongoing trend for many years, which has only accelerated and become more pronounced in 2023: bankers on the platform with specific industry and/or product focus, close more deals than do the “generalists.”

We all know the temptation to take on a deal outside of one’s core focus for various reasons – the deal comes from personal contact, bandwidth is available, “I can learn as I go,” etc.

While there are always exceptions, the data shows that the default should be to resist this temptation by either referring out “non-core” deals or politely turning them down.

#3. They Cut Their Losses. The willingness to cut losses and walk away from “going nowhere” deals has become, more than ever, a boutique banker’s best practice.

It is best, of course, to heed the old banker truism that the best deal is often the one not taken on, but when the “tea leaves” are shouting out, “it ain’t happening,” good bankers cut their losses and move on.

Let me conclude with a word on these “mixed” markets. Yes, financing and M&A activity are down from 2022, but especially in the last 60 days, here on the GTS platform, we have seen a nice uptick in both new mandates and progression toward deal closings.

So let’s all focus / refocus on where our expertise truly lies, hunt big deals in that expertise, and yes, for better or for worse, know when to cut our losses and move on.

Platform Resources and Deals 

Referrals. Do you know an investment banker looking for the benefits of independence and  professionalism provided on the GT Securities platform? We are always interested in speaking to highly ethical and credentialed banking professionals to join our platform. Please reach out to me at [email protected] to learn more.

Zaya Bold, Director of Banking Partnerships

Download our Free Guide on 8 Pitfalls to Avoid When Launching Your Own Banking Practice