My post praising the value of investment bankers led to a number of e-mails asking for the parameters for investment banking fees for M&A. Here is the retail M&A price list from a first tier investment bank:<\/p>\n
Aggregate value of transaction \u2013 Aggregate fee as a % of the transaction<\/p>\n
$20 billion \u2013 0.150%
\n$15 billion \u2013 0.180%
\n$12.5 billion \u2013 0.200%
\n$10 billion \u2013 0.230%
\n$9 billion \u2013 0.240%
\n$8 billion \u2013 0.250%
\n$7.5 billion \u2013 0.265%
\n$7 billion \u2013 0.275%
\n$6 billion \u2013 0.300%
\n$5 billion \u2013 0.320%
\n$4 billion \u2013 0.360%
\n$3 billion \u2013 0.400%
\n$2 billion \u2013 0.450%
\n$1 billion \u2013 0.600%
\n$900 million \u2013 0.625%
\n$800 million \u2013 0.650%
\n$700 million \u2013 0.700%
\n$600 million \u2013 0.700%
\n$500 million \u2013 0.800%
\n$400 million \u2013 0.900%
\n$300 million \u2013 1.000%
\n$200 million \u2013 1.200%
\n$100 million \u2013 1.500%
\n$50 million \u2013 2.000%<\/ul>\nAs I mentioned before, those are retail prices so you might be able to shave a bit from those. Also, at lower price points and\/or in deals that are less likely to happen you likely to have a retainer (say $50k) and a minimum transaction fee (say $750k).<\/p>\n
Sometimes, if I have a good understanding of the value of the company, I also structure deals giving bankers an upside for selling the company at a premium to my expected value. For instance if I think the company is worth $100 million, I might pay 1.5% on the first $100 million, but 2% on the next $50 million and 2.5% after that. You need to realize that the marginal value of the extra million is worth a lot more to the shareholders than to the bankers who would rather get the deal done.<\/p>\n
I hope this provides good guidance!<\/p>\n
Side note: IPO fees are very different. For IPOs where the market cap is below $400 million the bankers take 7% of the proceeds split between the book runner and the co-managers.<\/p>\n","protected":false},"excerpt":{"rendered":"
My post praising the value of investment bankers led to a number of e-mails asking for the parameters for investment banking fees for M&A. Here is the retail M&A price … Continue reading “”<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":20456,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[7],"tags":[],"class_list":["post-34","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-entrepreneurship"],"acf":[],"contentUpdated":"Investment Banking Fees. Categories - Entrepreneurship. Date-Posted - 2006-01-06T16:30:12 . My post praising the value of investment bankers led to a number of e-mails asking for the parameters for investment banking fees for M&A. Here is the retail M&A price list from a first tier investment bank:\n Aggregate value of transaction \u2013 Aggregate fee as a % of the transaction\n $20 billion \u2013 0.150%\n $15 billion \u2013 0.180%\n $12.5 billion \u2013 0.200%\n $10 billion \u2013 0.230%\n $9 billion \u2013 0.240%\n $8 billion \u2013 0.250%\n $7.5 billion \u2013 0.265%\n $7 billion \u2013 0.275%\n $6 billion \u2013 0.300%\n $5 billion \u2013 0.320%\n $4 billion \u2013 0.360%\n $3 billion \u2013 0.400%\n $2 billion \u2013 0.450%\n $1 billion \u2013 0.600%\n $900 million \u2013 0.625%\n $800 million \u2013 0.650%\n $700 million \u2013 0.700%\n $600 million \u2013 0.700%\n $500 million \u2013 0.800%\n $400 million \u2013 0.900%\n $300 million \u2013 1.000%\n $200 million \u2013 1.200%\n $100 million \u2013 1.500%\n $50 million \u2013 2.000%\n As I mentioned before, those are retail prices so you might be able to shave a bit from those. Also, at lower price points and\/or in deals that are less likely to happen you likely to have a retainer (say $50k) and a minimum transaction fee (say $750k).\n Sometimes, if I have a good understanding of the value of the company, I also structure deals giving bankers an upside for selling the company at a premium to my expected value. For instance if I think the company is worth $100 million, I might pay 1.5% on the first $100 million, but 2% on the next $50 million and 2.5% after that. You need to realize that the marginal value of the extra million is worth a lot more to the shareholders than to the bankers who would rather get the deal done.\n I hope this provides good guidance!\n Side note: IPO fees are very different. For IPOs where the market cap is below $400 million the bankers take 7% of the proceeds split between the book runner and the co-managers.\n ","Category":["Entrepreneurship"],"_links":{"self":[{"href":"https:\/\/grinda.org\/ko\/wp-json\/wp\/v2\/posts\/34","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/grinda.org\/ko\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/grinda.org\/ko\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/grinda.org\/ko\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/grinda.org\/ko\/wp-json\/wp\/v2\/comments?post=34"}],"version-history":[{"count":1,"href":"https:\/\/grinda.org\/ko\/wp-json\/wp\/v2\/posts\/34\/revisions"}],"predecessor-version":[{"id":17612,"href":"https:\/\/grinda.org\/ko\/wp-json\/wp\/v2\/posts\/34\/revisions\/17612"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/grinda.org\/ko\/wp-json\/wp\/v2\/media\/20456"}],"wp:attachment":[{"href":"https:\/\/grinda.org\/ko\/wp-json\/wp\/v2\/media?parent=34"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/grinda.org\/ko\/wp-json\/wp\/v2\/categories?post=34"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/grinda.org\/ko\/wp-json\/wp\/v2\/tags?post=34"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}