What's the typical sell-side transaction fee at middle market firms?
Trying to get a better sense of what senior bankers at middle market firms earn in an average year. Obviously depends on the transaction size....but for the median, middle of the fairway sell-side transaction at places like Raymond James / Piper Sandler / Harris Williams etc., what's the typical sell-side fee typically come out to? Just looking for ballpark figures here.
What % of the fee does the originating banker typically get?
Thanks in advance!
Based on the most helpful WSO content, middle-market investment banks like Raymond James, Piper Sandler, and Harris Williams typically charge sell-side transaction fees that are higher as a percentage of the deal size compared to bulge bracket banks, but the absolute dollar amounts are lower due to smaller deal sizes. For a "middle of the fairway" middle-market sell-side transaction, fees generally range between 1% and 2% of the transaction value.
For example: - On a $100 million deal, the fee might be around $1 million to $2 million. - On smaller deals, the percentage fee could be slightly higher, while on larger deals, it might scale down.
As for the originating banker’s share, the take-home pay is often tied to the overall fee volume. A common rule of thumb in capital markets is that 50% of the fee volume is distributed as compensation, though this is typically on a sliding scale. Senior bankers, especially those originating deals, can earn a significant portion of this, but the exact percentage varies by firm and individual performance.
Sources: Hardo Hot Take: Middle-Market Investment Banking is Not Prestigious or "High-Finance", Origination Fees on +$100MM Loans, What's happening during live deals?, https://www.wallstreetoasis.com/forum/investment-banking/how-ibd-makes-or-loses-money-and-why-that-matters-to-you?customgpt=1, Why Investment/Development to Capital Markets?
I worked at a LMM boutique in London and our fees ranged from 2-7% after ratchet considerations in our sell-side agreement. On the higher-end of EV we worked on (competing against HL, RJ, WB etc.) it tended to be 1-2%.
DC Advisory alert
It's a no-name boutique fella
what does the 25th - 75th percentile of transaction sizes at these shops typically look like?
Minimium $2m is the goal, typically for M&A, also ECM. Sometimes people go slightly higher / lower. Chicago bank I worked at raised it to $2.5m but again that's the goal. I have worked on deals for $1-1.5m, also have done loads of deals for more. It's all about the ratchet but banks typically try to ratchet so a decent sized deal (to MM it's like 200-300) it'd get them an average of $5m fee. Could be a bit outdated and every bank changes it periodically. For 2021 ish the fees were much higher. Depends on the bank, originating bankers get 15-25%. For MM most MD's, my personal view / conservative guess is 2-4m per year.
would echo to this reply here. Interned at a boutique in NY this past year and typically for M&A and Capital raise (which has a higher fee) would generate fees in the ball park of $1M-2M (transaction value of usually about 1-200M EV range), also have a retainer of about 100k per quarter but can be credited if deal is close
this is in line with my MM bank as well. Typically min of $2m and bigger deals will go way north of that, esp. if you hit into the incentives. Wide range but something like 0.7-2% of TEV depending on the size
1.5-2.5m min fee for LMM
At the LMM/MM boutique I worked for our target was $2M per deal, but that was over 10 years ago. We'd close 8-10 deals per year with about 15 bankers total, including the analysts/associates.
$2M min. Average fee I've seen over the years is $2-5M with the occasional $5-10M. Originator gets 30%. A good MD in the MM can do very well.
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