The Banker Conversation You're Not Ready For

Founders call me all the time after they’ve already talked to a banker. The conversation went one of two ways. Either the banker told them the business wasn’t ready, and they didn’t understand why. Or the banker took the engagement, and the founder is now realizing they have no idea what they actually signed up for.

Both problems have the same root cause. The founder didn’t know what the banker needed before walking into the room.

This post is about that conversation.

Banker vs. broker: the distinction that matters

Before anything else, let’s be clear about who we’re talking about. A business broker typically handles deals under $5M in transaction value. They list businesses, find buyers, and facilitate closings. They work on commission and often represent the seller, though the relationship is sometimes ambiguous.

An investment banker operates in a different category. They run structured sale processes, build buyer lists, manage competitive dynamics, prepare the CIM and financial models, and quarterback the deal from engagement to close. They charge a retainer, a success fee, or both. For deals above $5M to $10M in transaction value, a banker is usually the right call.

The distinction matters because the preparation is different. Bankers are more selective about what they take on. They have reputations with the buyer community and do not want to bring a deal to market that is not ready. If your business is not bankable, a good banker will tell you. That conversation is valuable even when it stings.

What a banker actually needs to see

When I coach owners through this, we spend real time getting the business ready before we ever dial a banker. Here is what they are going to ask for, and what your answers need to look like.

• Three years of clean financials. Not tax returns. Not QuickBooks exports. Proper income statements, balance sheets, and cash flow statements, ideally prepared or reviewed by a CPA. The banker is going to build a model on these numbers. If the numbers are messy, the model is wrong, and the banker knows it.
• A clear EBITDA story. What is your normalized EBITDA? What are the add-backs and why are they legitimate? Can you defend each one with documentation? A banker needs to be able to present your earnings to buyers with confidence. If you cannot explain your own add-backs clearly, they cannot sell them.
• Revenue composition. How much is recurring? What are the top customers and their concentration? What does revenue look like by product line or service? A banker needs to know what they are selling before they can sell it.
• An operations layer. Who runs the business day to day? What happens if the owner steps back? A banker who cannot answer the management continuity question for a buyer will not take the engagement.
• A reason for the sale. Every buyer is going to ask why you are selling. The answer needs to be honest, credible, and not alarming. Retirement, partnership restructuring, and capital deployment for a new venture are all fine. “I’m burned out and need out” is a different conversation.

What bankers will not tell you

Bankers are salespeople. They are selling your business, and before they get the engagement, they are also selling themselves. That means the banker call is not always a fully honest conversation.

A banker who wants your engagement may tell you the business is ready when it is not. They may project a valuation range that is optimistic to win the deal. They may downplay the timeline or the amount of work involved on your end.

The way to protect yourself is to know your business cold before you walk into that room. Know your EBITDA. Know your concentration. Know your add-backs and be able to defend them. Know where the bodies are buried, because a buyer will find them and you want to know first.

When clients hire me, this is prep work we do together before the banker ever gets involved. The goal is to walk into that first conversation with a business that is genuinely ready, not a story that sounds good until diligence starts.

The timeline question

Most founders underestimate how long a banker-led process takes. From engagement to close, a well-run process typically runs six to nine months. Some run longer. That is not a criticism of the process, it is just the reality of competitive bid management, diligence, financing, and legal.

Which means if you want to close in eighteen months, you need to be talking to bankers in the next few weeks. If you want to close in twelve months, you are already behind.

Get ready before you need to be. The banker conversation is easier when the business is ready. And the business only gets ready one way.

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* Every deal I look at is under NDA. The stories I discuss are real. Some identifying details — company name, specific geography, exact numbers — may have been changed to protect the seller. The lessons haven’t.