Firmex® Announces Publication of the 2023-2044 M&A Fee Guide™
TORONTO, Feb. 14, 2024 /PRNewswire-PRWeb/ -- Nearly half of M&A advisory firms increased at least one component of their fee structure in 2023, according to a new Firmex report, one of the most widely used virtual data room providers. That's up from the year before when 39% of firms raised a fee. Firms were much more likely to raise fees in Europe (58%) than in North America (38%).
As an authoritative source on M&A fees for sell-side engagements in the middle market, this report is utilized by both advisors and business owners as a reference point when determining fee pricing. With a comparison against previous years, the guide provides a look into how advisors, on a global scale, structure compensation for a deal through areas such as engagement fees, success fees, and additional terms.
"This is the seventh year that we have surveyed M&A practitioners on how they charge advisory fees, and this year our guide reflects the unique market forces impacting dealmaking and the ways advisors are adapting to those impacts," said Mark Wright, Firmex's general manager.
The report shows the most common type of fee to increase were periodic engagement fees charged as a monthly retainer or a per-hour work charge. Many advisors said they are increasingly looking to periodic revenue to help cover the increasing cost of staff and other operations. Overall, 35% of firms said they raised monthly or hourly fees, 28% raised fixed up-front fees, and 22% raised success fees.
Key highlights in this year's report include the following.
- Nearly half of all middle market merger advisors say they raised fee levels in 2023, prompted mainly by rising costs and a more difficult deal-making environment.
- Many firms have also modified their fee structure to emphasize recurring engagement fees to mitigate the risk of deals that take a long time to complete or never close.
- The growing use of earn-outs and complex deal structures is prompting firms to redefine how they calculate and collect success fees.
- 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.
- One-third of the firms increased their profits in 2023. Those that increased fee levels were twice as likely to grow profits than those that didn't.
Firmex surveyed 456 middle market professionals working in more than 40 countries across six continents to develop this year's guide. Key points drawn from the surveys are accompanied by expert commentary from Axial, DealCircle, and Divestopedia, as well as insights from advisors across regions.
The full report can be downloaded on the Firmex website.
Media Contact
Edward Stephen, Firmex, 1 416-840-4241, [email protected], https://www.firmex.com/
SOURCE Firmex
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