Welcome to our August Broker – Dealer newsletter!
First, we will share updated stats as to banker deal fee ranges in the current market environment.
Then, we will provide compliance and collaboration updates, along with an exciting fund marketing webinar invitation.
To all of our success!
Transaction Fee Ranges – August 2024
M&A:
Both from the Firmex / Axial 2024 M&A Fee Guide and our internal analysis of a cross-section of current mandates & deals on the GT Securities platform, we note M&A Success Fee Averages of:
- For $5 million deals, banker fees average approximately 5.5%
- For $20 million deals, 3.7%
- For $100 million deals, 2.1%
Per previous years, Firmex also notes a pretty even mix between “Lehman-type” formulas – where fee percentages decrease as deal value increases, flat percentage (most common), and Acceleration Formula” – where the fee percentages increase as deal value increases.
Note well: On the GTS platform, as noted last year, we continue to see Acceleration Formulas becoming more and more popular, with some of our highest-producing bankers now utilizing them almost exclusively.
Financings:
For equity, we continue to see clustering around a 5% fee benchmark, with less compression as deal sizes increase than in previous years.
For debt, very interestingly, we are seeing more and more fee ranges similar to that of equity versus the previous traditional debt fee clustering of “half that of equity.”
This is at least partially driven by an increasing number of traditional equity investors (private equity, family office, etc.) building private credit practices – creating more competition for better deals.
Other Thoughts and Notes:
- Firmex notes that most M&A advisors have raised their fee averages when compared to previous years, a trend also noted on the GTS platform.
- Firmex also notes – very positively for independent investment bankers – that “smaller firms have been able to hold their fee revenue steady and, for many, increase it even as business at larger investment banks continues to fall off.”
- Higher, outlier fee structures – e.g., greater than 6%, significant accelerations driven by deal value, etc. – are being seen more often on the platform than in previous years.
- As to retainers, for both M&A and financings, there is a minor but noticeable trend back to retained mandates, with the most common retainer amount now clustering around $10,000 – $15,000 monthly, a meaningful bump-up from the $5,000 – $7,500 clustering that had remained a standard for seemingly decades.
- Buyside structured fees remain a significant revenue driver for top platform producers.
Finally, the qualitative “client mood” that we have sensed from our ongoing conversations with platform bankers is that prospects and clients are slightly less fee and more credibility sensitive – i.e., can this banker get this deal done versus how much is the fee to do so…
This mood is very good for us, of course. Because for sure the very serious and experienced independent bankers on the GTS platform – having seen and done pretty much each and every kind of deal – have credibility in droves, do we not?
So the final word here is to focus on communicating true and unique value to the better clients – and when compared with previous years – the fee levels will more than take care of themselves.
Fund Marketing Webinar. On Thursday, July August 22nd at 10:30 am PT (rescheduled from July), we are excited to host an informational webinar with principals from the InvestX Fund.
InvestX is a leading cross-border pre-IPO investor offering access to private equity deals that, for many decades, were exclusive to a limited investing population. Launched in 2014 with a mission to bring transparency and trust to the private equity market, InvestX delivers access, liquidity, and innovation to the private equity asset class through investments in Late-Stage Private Equity.
It is a presentation and opportunity not to be missed, so register today Via This Link
