How do investment banks allocate success fees generated?
For example, if a team generates a $1mil fee from a sell-side engagement, how is it generally split between the firm, MD, VP, Associates, Analysts, etc.?
Specific percentage ranges would be great.
Hi Bumbledore, don't worry, the WSO Monkey Bot is here.... I'm hoping one of these links will help find your answer:
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I hope those threads give you a bit more insight.
Bump
Break down:
MD - $999,999.99
Rest - one penny
Adjusted Break Down:
The Firm - $900,000
MD - $99,99.99
Rest - $0.01
I have an older posts on how banks make money and how that is split between departments.
https://www.wallstreetoasis.com/forums/how-ibd-makes-or-loses-money-and…
For BB and other large firms this question is usually a black box. For boutiques, I've seen MD's make anywhere from 20 to 30% usually (or as high as 50% when the firm is smaller and the MD is more of a owner partner vs. employee).
Fixed costs are highly variable. In a good year, fixed costs are minimal and the firm is highly profitable. In a bad year, the firm is losing money. Note "fixed costs" here includes everything from telephones to VPs (ie, no revenue generating/originating IBD resources).
Hope that helps.
Staff pay, office and office front stuff. Machines etc. And they usually keep cash heavy to be liquidated at all time after 2008. Profits goes to mostly back to the vault. And performance bonuses are calculated % per deal.
Just for everyone else, $1mm fee isn't getting anyone excited.
Associates/Analysts don't get any fee %, regardless of how big it is. Juniors are not tied to relationships, whereas VPs and up have selling duties and quotas to hit (calls made / fees brought in / transactions executed)
You'll only get specific fees if the head of DCM/IB/ECM is able to find this thread. Only they will really know how fees get split up within specific groups, and then to specific MD's. A lot of it depends on performance of group as well. evne if you had a huge deal go through, in a down year, thats still going to get split up with the rest of the bank. That's just corporate life
The MD needs to do a couple more to make it to next year. The rest of the bunch gets their usual comp regardless. Overall budget of the team/division plays a much bigger role.
It's not that complicated. If you look at the public EBs, they all announce and target a certain ratio of total comp to revenue, usually in the 55% to 70% range or so. The way fees get split in reality is:
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