Independent IBD work: How much $ to charge for writing an IM?
Big of an unusual situation looking for input. I spent around 5 years working in the investment banking division / IBD before I resigned to go travelling a couple years ago.
During my travels I met some extremely wealthy smart people with an impressive background who are starting their own VC fund. They said they are looking to hire someone to write and build the IM / PPM presentation to go out to investors for the fund raise.
They offered me an “independent contractor” role where I would charge them either 1) a $ hourly rate or 2) a project total $ fee or whatever to build the IM / PPM.
Now I’ve done IMs before and they are a tonne of work sometimes taking many months to finalise. But I have NO idea what my rate should be.
Looking to gather as many opinions as possible, thanks!
This sounds awesome and there’s quite a few ways you can go about this.
My initial thought was to quote them an hourly rate that in your mind is legitimately fair along with a pretty hefty success fee. An hourly rate keeps you from going insane over months of iterations, but in the event that these guys raise $200mm or whatever - maybe you walk away with $1mm for a couple months of work.
My next thought was to negotiate a multi year engagement letter for a decent price. Get in on the ground floor as these guys’ primary banker. Along with the IM, help them along the way with the entirety of the process. You’ll learn a bunch and get a nice price for it.
And then on a different but similar note - depending on your situation, risk tolerance, belief in them, interest, etc. etc., why not instead ask for an equity stake and a job?
On the actual pricing specifics, I’ll let others opine as i’m not entirely sure. I just wanted to offer in my thoughts so that you can think about the different avenues of this and get the most out of it.
Note: I'm in a different country now but I used to live in the US for many years.
Been doing this as a side gig for a while.
I wrote a CIM for a healthcare company ~1.5 years ago, charged ~1000 USD in total for 1 fully-functionary LBO Model with flexible scenarios built-in and 1 CIM. That was rather low-cost for the customer, the father of a close friend of mine. If the CIM and the model eventually attracts actual financing (which was v. hard in their case), I expect to charge substantially more than $5,000, I'll say close to $16,000. It was like a low base / potentially high bonus gig. Just a data point.
Can we chat privately? would love to ask some questions
Yes. You can PM.
My 2 cents
It feels like you’re massively underselling your product!
I think as per really good post from @anonguytoibd, it’s a great idea to comp yourself to who else who does this
Realistically it will be the small debt advisory shops, i.e. Malborough, Gleacher and the accounting firms eg KPMG, E&Y (In Europe, not sure in the US).
They obviously offer a full team and will also do an investor outreach which you probably cannot offer - so doesn’t make sense to charge what they charge (which could be anywhere from low hundreds of thousands to a few points of money raised depending on how difficult the mandate, what debt instrument raised and how difficult the mandate)
Equally, 10k for a CIM and a full model seems like massively underselling. Won’t repeat the maths above but would seem like approaching it on the base of a few hundred of $ per hour makes sense (you won’t charge equivalent of partner $ / hour from legal firms as you simply do not bring the same value)
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