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Ever wondered how other advisory firms in your industry, region or city are structuring their M&A fees? The second annual M&A Fee Guide conducted by Firmex and Divestopedia has the answers. Offering a global perspective on M&A fees, with data collected from 471 investment bankers and advisors, this comprehensive report aims to provide greater transparency into average fee structures, what is being charged and why.
Inside, you’ll find valuable data and insights including average M&A fees by region and major city, deal flow and minimum transaction value, success fee structures & fee percentage by deal size, and forms of purchase price included in success fee calculation. To provide a real-world perspective, contributors from BDO, Dentons, and IAM Group weigh in on the results.
Key Findings in the Report:
M&A success fees vary notably by different regions and major city centers. For example, a majority of respondents in the US Pacific indicated success fees of 2-4% for a $50 million deal, whereas, in the US Northeast, a majority of respondents indicated success fees of 1-2% for a same sized deal. Given these significant differences, M&A advisors should ‘think locally’ when assessing their fees and not rely exclusively on national averages.
Success fee structures that more closely align bankers’ interests with sellers, where both parties are rewarded for a higher total deal value, appear to be more prevalent in the marketplace with 45% of respondents indicating that a scaled percentage success fee was used in the engagement structures.
There is no industry-standard definition of what constitutes purchase price in a transaction upon which a success fee is calculated, nor is there industry alignment on the timing of when a success fee is paid. That said, 76% of respondents include earnouts in their calculation of success fees.
“In a world where information is readily accessible, always, I think this report is a great step to providing useful data for all participants of the M&A universe.”— Jeffrey Deacon Managing Director, Private Debt Group, IAM Group
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