Guys,
Pretty interesting situation I find myself in. Recently I met with an individual who wants to hire me to help him on some buy-side M&A assignments. I'm a junior at a non-target and have been interning at a middle market investment bank for the last year and a half. The client who hired him is interested in making some acquisitions, and may want to build their own M&A department in the future.
My potential boss wants me to use my school's resources to help him (he's not very computer saavy). Basically, I'd be doing all the screening, precedent transactions, comps and DCF analysis. Pretty much anything that involves looking at excel and Bloomberg.
He asked me how much I would charge for this and I said I'd need to think about if I can take this assignment on, given the interview process I'm involved with, school and work. I'd give him an answer by the end of the weekend.
Just wondering - should I give him an hourly wage ($20-25/hour sound about right?) or a cold number for the entire project?
I know some of the projects we're working at the investment bank take 6-8 months to complete, and usually cost our clients somewhere in the neighborhood of $30-$40k or more depending on various factors. If I was to be working on these assignments from beginning of the deal to the end, how much should I charge?
I'm just at a loss of what to ask for as I've never been involved in this type of situation before.
TL:DR - will be doing some buy side m&a assignments, MD asked how much I want to be paid for each one. No idea. Any ideas?
Thanks
XX% of the deal fee? Not much value you can add at this point in your life, but could possibly squeeze some nice $ out of this if the guy takes the bait
$15-$45/ hour (these are actual pay structures that I received while in school). It's really a range, I'd throw the question back to him. If you don't NEED the money, just accept whatever he offers (unless it's below minimum wage). Having done several unpaid internships in school - it's about the experience, not the money. So I'd view the money as a bonus. Perhaps do a flat weekly/monthly rate because it takes the complication out of it. If you're charging "by the project", then do it by an hourly rate and just keep track of your hours.
just my $0.02
Thanks for the replies guys.
I like the % of the deal fee idea. How much do you think is reasonable? I would estimate (but have no idea) that the deal would be between $15-40k. If it is just me and him working on this, do you think 25% might be too high, or too low?
Also, the last bank that was hired to do this job failed to find any acquisition candidates the client liked. Therefore, there was zero deal. In this case, would the bank still be paid? If so, based on what?
The $15-$45/hour also sounds good. That's a big range though, I will probably ask for ~$25/hr. I'm already getting some good experience at the internship I'm currently working at, so this would be a way to make a few bucks on the side.
Sounds like a broad buy-side process. These tend to take tons of time, because not only is it hard to find a good target for the client, but they'll change their minds over and over again. Having said that, the likelihood of the deal closing isn't exactly high. I'd charge him an hourly wage.
If you do the math, you would see that you make more by charging him a predetermined project fee than by charging him an hourly wage. Also, your tendency would be to save time by charging him lump sum, against hourly wage, where you would be incentivized to kill more time. I would say lump sum is the win-win situation for you.
(Irrelevant but hourly wage makes you sound like a chimp, while lump sum make you sound like a baller)
If you're still in school, the chance of a buyside acquisition closing before you graduate is remote at best. Would be wary of trying to structure this as a percentage of the success fee.
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