Selecting a Banker: Beauty Contest / Bake-Off

This article outlines what a beauty contest is, why investment banks compete in them, what they involve.

What is a Beauty Contest or Bake-Off?

Prospective investment banking clients will conduct a “Beauty Contest” or “Bake-Off” as a means of interviewing several investment banks in connection with selecting a financial advisor, underwriter, or placement agent for a prospective transaction.

When participating in a beauty contest or bake-off, investment bankers will show why they are the most qualified to lead the transaction.  Reasons include:

  • The best team – profiles of people on the team
  • The best track record – total dollar value and volume of transaction experience
  • The most industry knowledge – top equity research on the sector
  • The most active trading support – volume and value of trading of shares in the market
  • The most relevant experience – tombstones of relevant deals completed in the sector
  • The best valuation – providing the most attractive valuation analysis of the company

beauty contest / bake off selecting an investment banker


What should investment bankers know?

While in the process of soliciting new business, investment bankers will often be expected by their clients to provide a view as to the likelihood of the success of a particular transaction. Investment bankers must be careful not to guarantee or otherwise make any binding commitments to their clients concerning pricing, deal size, or the successful completion of a transaction.

From a compliance perspective, an investment banking pitch book for a beauty contest should:

  • Use the pitch book style template;
  • Have prior review by legal or tax professionals (internal or external) if the pitch book includes any in-depth descriptions of corporate, securities, tax laws, or complex legal issues;
  • Not contain any confidential information concerning other clients or transactions. Any estimates of the prospective client’s legal fees, printing costs, or other expenses should be clearly identified as “estimates” in the pitch book. Any estimates of legal fees should be checked with Legal;
  • Be based on industry-leading financial modeling and analysis


How the Beauty Contest / Bake-Off works

The beauty contest process is initiated by the company looking to hire a financial advisor and typically follows a schedule such as:

  • Banks arrive at the client’s office and present their pitches in person
  • Company deliberates on the quality of the pitches and valuation of the company
  • Company asks for draft engagement letters and fee proposals from top 1-3 choices
  • Bank chooses advisor and signs an engagement letter


Additional Resources

This has been a guide to the investment banking Beauty Contest / Bake-Off process of selecting an investment banking advisor. To learn more about careers in banking, see these additional resources:

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