Investment banking advisory fees are earned by banks for providing M&A and other advisory services. This article looks at how fees are determined based on bank reputation, client needs and deal specifics, and how fees are allocated between lead and supporting banks.
Fee depends on bank reputation and client need
Top banks can charge higher fees due to better execution ability and client access. Boutiques charge less but offer specialized services. Banks tailor solutions based on client need – buy-side or sell-side advisory, fundraising, restructuring etc.
Fee size depends on deal specifics
Larger, more complex deals allow banks to charge higher fees. Equity deals tend to have higher fees than debt deals. Banks quantify advisor value to justify fees.
Fees split between lead and supporting banks
While the lead bank gets a majority share, supporting banks also get a cut based on their contribution. More reputed banks have greater bargaining power.
Advisory fee depends on bank reputation, client need and deal specifics. Fees are split between lead and supporting banks based on negotiated percentages.