For Your Reference

1. What is a Financial Services Company?

Financial Services Company assists and advice private company in raising funds from Banks and Capital Markets, as well as in providing strategic advisory services for mergers, acquisitions and other types of financial transactions.

2. What is M&A?

The phrase mergers and acquisitions or M&A refers to the aspect of corporate finance strategy and management dealing with the merging and acquiring of different companies as well as assets. Usually mergers occur in a friendly setting where executives from the respective companies participate in a due diligence process to ensure a successful combination of all parts.

3. Why use a Financial Services Company when funding a company?

  • The Financial Services Company can view and represent your company objectively
  • Helps you to maintain focus and energy on company operations, thereby avoiding unnecessary business disruptions Your company's performance must remain strong during a transaction.
  • An FSC can identify prospective Banks and Institutional Investors. The FSC teams use their extensive network of contacts and relationships to confidentially yet assertively market your business.
  • Your interests and the FSC's are in alignment, as the FSC fee is contingent upon the FSC's consummation of a transaction.
  • An FSC is experienced in negotiating complex transactions. Thus, because you may ultimately become partners with the future investor or banker, the FSC can insulate the future seller/buyer relationship from possible damage during strenuous negotiations

4. What's the difference between a Financial Services Company and a Business Broker/Agent?

  • A business broker/Agent tends to work with smaller fund raising and complicates and do not understand the business.
  • A business broker/Agent generally is not staffed with professionals and experts with accounting, valuation, research and other expertise, as is a FSC.
  • A business broker/Agent advertises the transactions carried out whereas FSC does not, as confidentiality is paramount.

5. How is a Financial Services Company compensated?

A FSC's compensation is primarily a success fee. If a transaction is not completed, the FSC receives little or nothing. The success fee is generally an agreed-upon percentage of the transaction value, with a smaller percentage as the value increases.

6. Is a retainer required and if so, why?

A retainer is a payment that helps to cover the firm's administrative costs for such things as compilation of client information and research and analysis, all of which are detail-oriented and time-consuming. The retainer also serves as a commitment from the client to diligently pursue a transaction.