Investment banking is somewhat of a misnomer. In many cases, investment bankers are merely finders of investment sources for the entrepreneur and finders of entrepreneurs for the investors. Such investment bankers are not investors. However, they may also be broker-dealers, entitled to take some small fraction of the issuer’s securities as partial payment of the fees for their services. All others must be paid in cash for their services.
Traditional engagement letters for investment banking describe the in-scope services in only the vaguest of terms. Compared to the rote and scripted processes of a call center services agreement or a mortgage lending services agreement, the art-form of investment banking is one of the last bastions without meaningful SLA’s, precisely because experience and judgment in valuation and viability are not scriptable. “Best efforts” and “due diligence” standards do not guarantee results.
Investment bankers who target the services industries could benefit from a more detailed and operational understanding of supply chain management and sourcing strategies.