Advising board of directors
I am interested in Perella Weinberg and I have noticed that in many deals they are keen on advising target companies' board of directors (Continental directors on Schaeffler's bid, UST directors on Altria's bid...).
I would like to know how you view getting an advisory mandate from a board of directors rather from an executive commitee. Is it kind of a consolation prize or not? Are fees for such mandates comparable to fees for advising executives commitees? And is the job for junior bankers similar in both cases? Any input welcome!
well its more of a providing unbiased advice on an unconflicted type role. a lot of boutiques do this as well as provide fairness opinions as more of an independent third party
Jodhpur,
In this like in all things professional, I encourage you to be precise in your language. While I cannot be sure without seeing the materials you are referring to, I suspect you are talking about special committee assignments. By nature, almost any M&A advisory assignment involves advising a board of directors as well as the management team (rather than an "executive committee").
However, in situations where a conflict may exist, it is sometimes advisable or necessary for a Board to form a "special committee" of disinterested directors. By disinterested, I mean that they are not, for one example, part of the bidding group in an LBO transaction. In a situation like this, a special committee is required under rule 13E-3. In another example, like a minority squeeze out where some members of the Board may be holders of the minority stake, a special committee advisor is recommended but not necessarily required.
Regardless, in many of these situations, the buyer (which may include members of management and the board) may have an advisor, the company might have an advisor, and/or the special committee might have an advisor.
Given the recent past where financing might play a major fee contribution role, many large firms sought to align themselves with either bidding groups or with the company on the sellside. The pitch for many boutiques without real financing muscle was their independence, and as such focused more upon winning special committee type assignments. While no one would walk away from a spec comm mandate, for many firms it was the assignment of last resort given the lucrative nature of financing fees if they could win the more conventional engagement.
As for fees, many times a Special Committee mandate involves lower fee rates than an equivalent "company" sellside, but this would depend upon the facts and circumstances of the assignment in question, particularly whether the company had an advisor in addition to the special committee.
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