Banks getting M&A credit for financing
I’m working on a financing right now where one of the stipulations of our engagement letter was that we be given M&A credit. I assume this is just so our bank looks better in league tables, but I’ve seen this a few times now - one of my coworkers is working on a financing where we’re being given M&A credit, and I’m on a sell side where one of the other banks is just arranging the pro forma company’s new RCF but is being given M&A credit. Is this a common practice and how can you tell if a bank is actually doing well in M&A or if they just inflate the league tables through a bunch of financings with “M&A credit.”
Banks like JPM, Citi, BofA will usually leverage their balance sheets to get credit on deals, which is why league tables might not necessarily be the best reflection of a bank's M&A franchise.
This is quite common, unless the banks that are primarily brought in for advisory are willing to extend credit to provide the financing as well, you will find these balance sheet banks listed as a "financial advisor" too alongside the main advisor like GS / MS or EBs in the press release
Happens quite a bit honestly. Clients could not care less in most cases so long the fees go to the guys advising them. M&A credit is usually given to actual M&A advisors or banks leading the financing - not some random bank coming in for 5% of the RCF.
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