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M&A Advisory Fees
 

y2yankees99's picture
(Baboon, 109
 
Points)
 on 3/2/08 at 11:22pm

Hello,

I would appreciate it someone could breakdown the general percentage range that banks make for serving as a lead advisor on an m&a transaction. I imagine it would differ by a number of factors:

1) buyside or sellside (I'm pretty sure buyside fees tend to be higher, but can anyone give a rough estimate)
2) whether deal is completed or not (It makes sense that buyside fees would be more skewed towards getting the deal done, whereas sellside fees wouldn't be less heavily based on completing the deal. Does anybody know how much these banks get paid for their work when the deal doesn't go through)
3) size of deal (larger the deal the smaller % the fees are)

Thanks

models_and_bottles's picture

Almost every bank is given a

IB
(Orangutan, 302
 
Points)
 on 3/3/08 at 12:20am

Almost every bank is given a retainer (aka monthly fee) to work on a deal. This is separate from the closing fee, which is how banks really make money. The retainer is can be anywhere from 25-50k to hundreds of thousands a month, depending upon deal complexity and staffing requirements.

The fee % is usually on a sliding scale, with larger deals earning a smaller % of fees (although the absolutely size of the fee will go up). Every bank has a different scale. Look up the "lehman scale" or double lehman to get an idea of what they're like.

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