M&A Fees for IB’s

Intern in IB - Restr

For those of you who have had exposure to engagement letters, what are typical fees a BB bank earns on advising M&A deals? Say $1b+ deals. I know sell-side advisory is higher than buy-side, but was always curious what typical fees are.

Comments (14)

Nov 26, 2019

$10-20mm depending on how much you really think you'll need to do, more for a sell-side.

Nov 26, 2019

Dependent on the type of transaction. Is it a distressed sale, is the company a unicorn, what kind of exposure are you expecting, are you also doing the financing through the bank?

On a general basis I would say fees are somewhere in the range between 0.5%-1.25%. Lower fees for "easier" deals. Fees over 10m EUR is rare in Europe for c. 1b deals.

Most Helpful
Nov 26, 2019

Look at proxies - you'll see how much people get paid as its disclosed in large deals with fairness opinions. As a general rule it's a function of the size of the deal. I've been paid 20bps on a 30bn deal and 180bps on a $500mm deal and everywhere in between. Guggenheim got paid 25bps on the Red Hat deal, and BAML only got paid 10bps on the First Data deal. It's really a function of negotiating leverage and how the relationship is.

A bunch of it is public domain, though, so feel free to look at the proxies to see what people made. It's a good practice to also see what the different banks roles were, because in most of these cases with multiple advisors one or more of the banks did very little work (and are compensation is heavily weighted towards the bank that did most of the work).

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Nov 26, 2019

HY Financing stuff about 80bps usually

  • Intern in IB-M&A
Nov 26, 2019

Worked in MM in CEE and fees were $10k-20k/month + 1.25-1.75% of the deal.
Deals were mostly $70 mln-$250 mln

Nov 26, 2019

I feel like retainers are getting more and more unusual. If I were to sell my own company that would be the first thing I'd wipe off the engagement letter. You want a sale to go through as quickly and smoothly as possible, for the highest value, I'd never incentivise my banker to drag his feet through the procees.

Nov 26, 2019

For MM/LMM bankers have retainer fees as they do not expense stuff back to the client in my experience. It's simply the cost of running the shop!

  • Prospect in RE - Comm
Nov 26, 2019
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