Bake off

When a company decides to sell or raise capital it usually invites several banks to present, then appoints one or more. The bank that wins holds the mandate, which is the engagement letter setting out the scope, the fee and the exclusivity.

Selection turns on more than the valuation shown. Sector credentials, the individual team rather than the institution, the quality of the buyer list, and financing capability all count, and for a sponsor an existing relationship often counts most of all.

Fees are typically a success fee expressed as a percentage of enterprise value, sometimes with a retainer and an incentive step at price levels above a threshold. That structure is deliberate: the bank is paid mainly on completion, which aligns it with getting a deal done, though not necessarily at the highest price.

On larger deals the seller may appoint two banks with different roles, and on a sell side the roles are usually lead adviser and a second bank brought in for distribution or a specific relationship.