For those of us in a boutique, does yours charge a retainers fee?
Success fees are received upon the completion. I think that's the industry standards, boutique or Wall Street. But there seem to be a huge variation in the retainers. Given the boutique's business models, it makes sense to charge retainers. It gives clients the incentive to cooperate (for DD or what not) and helps us pay the necessary bills. Does your firm charge the retainers? If so, how much (if you are allowed to disclose)?
yup, we also do valuation work, but for m&a work, typically 25-40k.
Yes. We charge an up front fee, creditable against a monthly retainer. Those are both credited against the success fee.
Up front, one-time $50K retainer is standard.
Are the fees negotiable in your firm? You don't want to lose a client because of the fees.
Yes. They are deal dependent. If there is a deal with a higher probability of success, you naturally will reduce the upfront costs assuming the success fee will be great. Most legit groups won't take a deal they don't think they can close, but there is certainly variation within deal flow.
If a client pushes back on the success fee percentage, you could also structure it in a way where the bank earns a higher fee if the transaction value exceeds a specific threshold (i.e. laddering approach).
Most of our transactions have some sort of ladder. We also will occasionally waive a retainer in exchange for higher upside on the success fee or a higher minimum fee. Every situation is unique and it generally depends on likelihood to close, competition for the business, and frankly, how much we want the client given our existing workload.
My previous company had ladder fee structure too. Mine has a higher upfront fee which I am not allowed to disclose. What regions do you focus on? Are you a sector specialist?
We focus on a few sectors and have a geographical focus. Yeah, it depends on the number of competitions and how much you can realistically charge without losing that client. I have never come across a deal where we waived a retainer. Because of the market we work in, our failure rate is relatively high, not too high, but higher than most firms. It take longer for us to close a deal as well. Realistically, we need a retainer. And without it, DD processes, ours is very comprehensive, would be a nightmare. I hate to chase up clients for more documents or information.
LatAm?
Ibracadabra?
Close enough. We have done a few mega deals for household names.
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