Tamar Frankel wrote a seminal white paper a while back on the inherent conflict bankers face when asked by a client to provide objective advice, while only get paid when a deal is done.
While the Frankel white paper focuses on the benefits of hiring a financial advisor (FA) to handle a bond financings, there has also been a growing trend among hospitals and health systems to bring in an FA ahead of a specific financing.
Without the workload of preparing a financing, the FA can take the time to conduct a detailed review of the client’s situation and help position for future access to the markets. This process can involve many tasks that do not result in transaction fees and are therefore largely ignored by bankers. Some of these tasks include analysis of debt capacity, review and development of rating agency relations, even disclosure practices.