Frontera Energy, a Toronto-based oil and gas company, hired both Citi and Goldman Sachs to explore a potential sale1. This is a common practice in the business world, especially for transactions of significant size or complexity. Here are a few reasons why companies might choose to work with multiple banks:
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Expertise: Different banks may have different areas of expertise. For example, one bank might have a strong track record in the energy sector, while another might be known for its ability to find buyers in certain geographical markets.
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Network: Banks have extensive networks of potential buyers. By hiring multiple banks, a company can potentially reach a larger pool of potential buyers.
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Negotiation Power: Having more than one bank can create competition among potential buyers, potentially leading to better terms for the seller.
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Risk Management: Engaging multiple banks can also spread the risk. If one bank’s efforts do not result in a satisfactory deal, the other bank might still be able to deliver.
Please note that these are general reasons and the specific reasons for Frontera Energy’s decision could be different and are likely based on a variety of factors specific to their situation. For the most accurate information, I recommend reaching out to Frontera Energy or the involved banks directly.