Why top-tier advisers are worth their fees in a billion-dollar M&A deal

When a family runs a billion-dollar transaction, the identity of the bank and the law firm is itself part of the negotiation. Above a certain size, hiring the best-known names has a measurable impact on the deal.

In large M&A transactions — anything above a billion — Westwick consistently advises the families we work with to hire top-tier investment banks and top-tier law firms. The reasoning has nothing to do with prestige. It has to do with what those names do to the negotiation.

Take a sell-side process. Appointing a Goldman Sachs or a JP Morgan as lead adviser changes the behaviour of strategic buyers. No M&A executive wants to explain to their own board why they passed on a pitch deck presented by a bank of that rank — particularly if, three months later, a competitor announces the acquisition. The name on the cover of the information memorandum gets the meeting. It also keeps the meeting alive.

Take a live negotiation. Appointing a Magic Circle or equivalent law firm signals to the counterparty that the family is properly advised. It removes the opening phase of ego-management between advisers. It gives the family sophisticated, essentially unlimited resources to work through any document or process. The counterparty's team adjusts accordingly.

Top-tier firms are not always the right choice for day-to-day operational matters. They are expensive, and they can over-complicate simple issues. But when the stakes are high, their extra fees are almost always worth every cent. Credibility, properly paid for, is one of the few things in a big deal that actually moves the price.