The Art of Client Service Today
ArticlesOctober 2019

The Art of Client Service Today

By Russ Warren,
Managing Director

The servant leader is as old as the Bible. But how is the art of service practiced in the 21st Century?

An investment bank is a specialized client service firm, advising owners of middle-market businesses on the most important projects of their professional career, harvesting the work of a lifetime, or multiple lifetimes. Consistent with the definition of the word service, we perform our work to benefit our clients and promote their interests. To thrive, we must consistently provide better service than competitors.

It’s About the Client – Core Values

Integrity. At the heart of a true service firm is a “Client First” culture. Nothing is as important as earning the reputation of consistently and decisively putting the best interests of the client first.

Service begins with checking egos at the door, listening to develop a thorough understanding of what a business owner wants to accomplish and answering questions and any concerns about the process. It includes offering a realistic threshold value and tailored ideas on advantageous financial structures, using a company-specific, forward-looking financial model with appropriate input assumptions. It means leading a client to think about the future “unfettered”—in other words, what could this business be with the right resources? What would the owner want to do after the closing?

Agreeing on the objectives of a transaction enables the bank’s client service team to conduct a process well proven to flush out more premium offers with better price and terms and ‘clear the market’. The client maintains control of key decisions, but the client service team does all the heavy lifting.

Exceptional service requires frequent, friendly and above all clear communications to keep everyone on the same page—the owner, other advisors, and employees brought onto the Transition Team.

Service excels when the client service team treats each engagement as a long-term advisory relationship rather than as a one-time transaction. In return, future referrals flow from such service.

Client Service – What’s New

The core principles of client service have changed little over the years. Nonetheless, if teamed with today’s evolving business practices and underlying enabling technologies, business owners can expect a gratifying 21st Century Client Experiencewhen they decide to transition their business.

Expertise and Talent: Leading investment banks are specializing to better serve clients in selected industry segments within the middle market by creating dedicated Industry Service Teams led by a Managing Director with deep experience. Doing so enables us to tell the Company’s story effectively and to efficiently find the best prospective buyers—strategic, private equity, and family offices. Frequently interacting with these important industry players means they take our calls and listen to why we believe the idea is compelling. Examples of Industry Teams are: Industrials, Distribution, Business Services, Food and Consumer, Healthcare and Energy.

Leveraging the Computer: Tailored Resources: Electronic search capabilities and customized database platforms have enabled the creation of powerful in-house and subscription databases, search tools, and unique management systems to track prospective buyers’ interests and manage follow-up actions. Until this breakthrough, many prospective buyers of companies with less than $100 million in revenues were challenging to identify efficiently and contact.

One product of these custom resources is a prioritized Bespoke Buyers List, stating why each buyer is likely to be interested. The client can delete any sensitive prospects before calls begin. As a result, fewer calls can be made to better prospects, reducing the elapsed time to closing with less unproductive exposure of client information.

Another way the internet has changed the art of client service is in powerful research for the Confidential Information Memorandum. Years ago, it took a research librarian a week to locate specific information if it could be found at all. Today, a skilled Associate can find information on the company’s competitors and markets in an afternoon to support marketing claims and financial projections.

Long Reach: Today, many middle-market companies operate in a global market sector, which means they could attract strong buyer interest outside the United States. Cross-border transactions have an additional layer of complexity but can add value for some clients. Premium service includes the ability, resources, and experience to source and negotiate with foreign buyers using local support when needed. Therefore, investment banks have formed international alliances, such as the Alliance of International Corporate Advisors (AICA), which two times a year brings together similar member firms from the Americas, Europe, the Middle East, and Asia. Members assist each other by identifying local counter-parties and dealing with those parties in the local language as needed.

Communications and Expectations: Responsiveness and clear communications are cornerstones of exceptional service. The U. S. Postal Service doesn’t get much business related to M&A transactions anymore, because there are ‘instantaneous’ options. A client has the right to expect an appropriate, timely response to developments throughout the process using texts (“Got your message, we are on it, and will talk with you tomorrow morning…”); phone calls for when two-way interaction is most effective; and emails that lay out in writing for future reference important matters and conclusions. Of course, electronic transmission speeds scanned documents like draft purchase agreements on their way for review. However, meetings can also be important at key stages of the process, like management presentations or walk-through the most interesting Indications of Interest.

Technology has changed everyone’s expectations of appropriate response time. Years ago, many negotiations were conducted by mail, with plenty of time to think and respond carefully. While we would not want to go back to the ‘good old days’, there are times in a negotiation when it is best to heed the reminder of psychologist Victor Frankel— “Between stimulus and response, there is a space. In that space is our power to choose our response.”

The Opaque Value of Middle Market Investment Banking Services: Many business owners have more difficulty deciphering the economic return from purchasing a service than from buying a physical asset like a machine tool, or even in fully understanding what the service entails and why they need it.

Shedding Light: In 2016, finance professor Michael McDonald at Fairfield University conducted an independent study on “The Value of Middle Market Investment Bankers.” Casting a wide ‘blind’ net, the study obtained empirical data and commentary from 85 owners who sold their businesses for between $10 million and $250 million between 2011 and 2016. From written comments, “the majority of business owners felt that investment bankers added value in the sale transaction… with 84% of respondents citing the final sale price as being equal or higher than the initial sale price estimate provided by the investment banker.” Ranking the importance of the elements comprising the bankers’ service, the respondents revealed experience at odds with popular beliefs. They learned that there is a lot more to selling a business than finding the buyer:

  • Managing the M&A strategy and process (Most important)
  • Structuring and negotiating the transaction
  • Adding credibility to the seller
  • Enabling management to focus on running the company
  • Educating and coaching the owner
  • Preparing the company for sale
  • Identifying and finding the buyer (Least important)

Creative Fee Structures: For better alignment with some clients, investment banks can offer ‘gain-sharing’ fee agreements in which a lower percentage is earned up to the midpoint in a pre-agreed value range and a higher incentive fee is applied to the premium for win-win results.

WIIFM – What’s in It for Me?

Benefits to the client of these recent improvements in the art of client service today coupled with the core principle of Client-First Service can mean exceptional results for a middle market business owner:

  • Highly incentivized client service team
  • More premium offers
  • Higher Certainty of Close
  • Faster process to Closing
  • Market clearance – highest price, best terms at closing date

By the way, the acquisition market for middle-market businesses is very strong as we go to press.

© Copyrighted by EdgePoint. Russ Warren can be reached at 216-342-5859, by email at or on the web at