Lets say you have a brokerage team with a 3 analysts, 4 VPs and a MD. The MD sources does most of the deals. The team brings around $5m a year in revenue (brokerage). How much of the $5m goes to the MD that runs the team?
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Very much dependent on firm. At the firm where I intern it's a 60/40 house split and then some % team split which depends on how senior the person is. Our revenue last year was 6.5-7 million. The info I gave is somewhat useless because I'm not sure of the exact splits the MD's have of which there are 4 and then they have teams of 10 or so people plus the salaried support staff. I'm sure they get paid well, but it's not super crazy. At the old firm where I interned, which was very small like 10 people, the MD there made 400k all-in. I know because he told me and he said it was a below average year for him (took 4 months off and just didn't do that may deals) his partner made 600k+. This was a shop with revenues in the 2.5 million range.
It’s going to be extremely volatile because brokerage income is volatile. Although brokerage can be extremely lucrative, people forget how much a commission gets chopped up.
for example, $100MM sale with a .5% commission. $500,000 fee. Let’s say the MD gets half and the team gets the rest - great $250,000. Now split with the house - 50/50 - now the MD keeps $125,000 - now pay taxes (50%) - now your fee is 62,500. Also add in the fact that you need to pay for healthcare etc., and because you’re an independent contractor, you don’t get a group plan like traditional employees.
I think your house / team split is aggressive. “The house” and “the team” are generally the same thing. Like the house takes the money so they can pay your team and pocket the difference
At least that’s how things worked in IB
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