Selecting a great M&A advisor is more difficult than it appears. It takes great thought and consideration as many factors vary into effectiveness and fees implied. The Firmex M&A Fees Guide 2019-2020 addresses data collected from more than 480 different investment advisors and bankers across the globe. Their aim is to provide a holistic perspective on average M&A fees and why they are charged.
Before beginning you should always research your region of choice as advisor success fees typically do vary by location. With a focus on Europe, Africa, and the Middle East, we aim to provide an image of trending fees in these areas of the world.
In the EMEA (Africa), the M&A Fee Guide 2018-2019 lists that about 47% of M&A advisors take on anywhere between one to five separate deals annually. 36% of advisors value their minimum transaction value at less than five million dollars.
Analyzing all applied fees from M&A advisors who state that they implement a fixed fee to structure their work and those who implement a monthly fee, it becomes clear to understand which apply a higher fee. 51% of the individuals who structure their work around a fixed rate have reported their fees at being greater than $15,000, while those who reported a monthly fee listed their rates at being somewhere between $5,000 and $10,000.
Of reported expenses incurred by their own firm, M&A advisors in EMEA list the three top expenses on sell-side engagements. These top three expenses are the most common for reimbursement by clients. They are: (1) Travel and accommodation (listed at 35%) (2) Travel, accommodation, and data room (26%) (3) Travel, accommodation, printing, materials costs, and data room (14%).
A little more than half (53%) of M&A advisors claim that their engagement/retainer/work fees are collected and more often than not netted against any success fees they have earned.
However, regardless of when the components of a purchase price is received on the end of the vendor, 55% of M&A advisors in EMEA state that they are typically paid the success fees in full on closing.
The top two areas that add the most value for advisors in EMEA include: Sourcing buyers and managing the sales process and Negotiating the deal and managing the sales process at 18% and 17% respectively.
Prior to selecting any M&A advisor it is vital to understand the top two EMEA reported factors to consider: the complexity associated with a transaction and the risk involved in closing a transaction.