"Economics" of a Deal
What are "economics" of a deal? I know it has something to do with how the financial advisers get paid..
What are typical economics for a financing, m&a, etc..?
thanks
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economics = underwriting spread and/or advisory fees.
It's the money your firm makes.
its just a fancy way of saying 'fees' - bankers love to speak with obfuscations so that the layperson doesn't understand what they are saying. Sadly, in reality virtually all of the terminology references some pretty basic concepts
This is very true.
To help clarify for the OP though, economics usually referes to one investment bank's share in the total banking fees for a deal. So if a company does an IPO for $100 million, and the gross spread is 7% (meaning all the underwriters as a group are being paid 7%), the economics for the deal are what split of the fees went to Citi vs. Goldman, etc.
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