Factors Influencing Fees
The fees charged by a Corporate Finance (CF) advisor can vary depending on factors such as the complexity of the transaction. Advisors typically charge a fixed fee for specific tasks, for example, advising on a fixed scope hand-hold to completion, where the buyer is already identified and a potentially acceptable indicative offer received. In some cases, fees may be based on an hourly rate, reflecting the time and resources dedicated to a particular engagement, for example on a financial due diligence mandate.
Common Types of Fees
- Contingent Fees – A fee paid upon the successful completion of a transaction, usually calculated as a percentage of the final deal value.
- Retainer Fees – A retainer fee is an upfront payment that covers the significant initial work required at the start of a corporate finance mandate, such as preparing financial information and positioning the business for potential buyers or investors. It also secures the advisor’s time and commitment from the outset.
Initial Consultation and Engagement Letter
Most advisors offer a free initial consultation to discuss the client’s objectives and outline the scope of the engagement. Following this meeting, a formal fee proposal is provided in writing. This document clearly breaks down the anticipated costs, ensuring transparency and avoiding hidden charges throughout the deal process.
All terms, including the fee structure, are formalised in an engagement letter, which sets out the responsibilities of both the advisor and the client before work begins.
