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Well, according to Dragon they were supposed to protect them from bad deals by doing due diligence. So that would be worth $5 mil right there if they had done t

Well, according to Dragon they were supposed to protect them from bad deals by doing due diligence. So that would be worth $5 mil right there if they had done their job properly, since Dragon's owners would not have gotten screwed out of all their money. But aside from that, bankers usually get paid for greasing the wheels, making introductions, getting the deal done, moving money, finding financing, getting a better price, that sort of thing. Think of them as wedding planners for two people who want to get married but have just met in person two days before.

malandrew 14y ago
TBH Most bankers haven't the foggiest clue how to perform due diligence. The best due diligence is done by someone in the business plus an experienced accountant. Bankers only know enough about actual company finances to value them assuming everything is kosher. If something isn't kosher in the balance sheet, few bankers I know would spot it. Most trust the balance sheet and assume that if there were any shenanigans going on that the accounting firm would spot it (despite the fact that the accounting firm can just as easily be complicit). When bankers do comment in their reports on accounting irregularities it is only in relation to one of that firm's peers in the market and in the context of helping the bank's clients better be able to make a comparison of numbers when they don't measure the exact same thing. FWIW I'm a former investment analyst at a broker dealer that has done due diligence. In one case I was working on the investment report for a tech company that was supposed to IPO. A few months later, after being fed up with banking and becoming interested in tech, I went to work for that company as a product manager. The due diligence I did as a banker and the reality I saw as an employee were night and day. My banking self didn't know nearly enough to properly perform due diligence. The saddest part is that of all the other analysts both junior and senior were even more ill equipped to do due diligence on a company like that than I was.

malandrew 14y ago

TBH Most bankers haven't the foggiest clue how to perform due diligence. The best due diligence is done by someone in the business plus an experienced accountant. Bankers only know enough about actual company finances to value them assuming everything is kosher. If something isn't kosher in the balance sheet, few bankers I know would spot it. Most trust the balance sheet and assume that if there were any shenanigans going on that the accounting firm would spot it (despite the fact that the accounting firm can just as easily be complicit). When bankers do comment in their reports on accounting irregularities it is only in relation to one of that firm's peers in the market and in the context of helping the bank's clients better be able to make a comparison of numbers when they don't measure the exact same thing. FWIW I'm a former investment analyst at a broker dealer that has done due diligence. In one case I was working on the investment report for a tech company that was supposed to IPO. A few months later, after being fed up with banking and becoming interested in tech, I went to work for that company as a product manager. The due diligence I did as a banker and the reality I saw as an employee were night and day. My banking self didn't know nearly enough to properly perform due diligence. The saddest part is that of all the other analysts both junior and senior were even more ill equipped to do due diligence on a company like that than I was.