PCA/Private Equity Secondary Fees
I was reading Secondaries Investor's 2022 Advisory report and had some questions from it.
How does fee generation compare to deal value? For example, Evercore did ~57 billion in deals (of the ~130 billion in deals done, which is a wild share compared to traditional M&A where the leading firm has 15% share [GS]), what would you guess their total fee generation looks like?
Overall, I am trying to gain insight into fee generation per head in PCA/secondary advisory compared to M&A advisory. Is it more or less profitable for the firms?
GP-led transactions are typically 2.5-4% of Commitment, so pretty rich. Very large (500mm+) LP sales are like 50-100 bps. You'll find the sketchy brokerage firms (aka Setter) charging buyers like 3-5% fees for tiny 2mm deals.
Please correct me if I'm off.
Since Evercore did 57 billion in deals advised on, with 40% of this LP, LP fee generation is between $114 million and $228 million ($57 billion * 40% * 50 bps or 100 bps). Assuming a 2.5% GP fee, GP fee generation is $855 million ($57 billion * 60% * 2.5%).
With Evercore PCA having ~90 people (per their website stating 70), fee generation per head would be $10.7 million.
Larger LP deals are not 50 or 100bps, much lower
Nah not true. Most of the groups are still charging .5-1% for big LP deals. setter will charge like 3-5% but they're bush league. I know a few groups under cutting the market at like 25 bps
not too far off
bump
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