Big Deals May Not Mean Big Bonuses
The value of global M&A deals may be higher than ever, but the same can't necessarily be said for fees and this year's investment banking bonuses.
Maybe it's a harbinger: Figures compiled for eFinancialCareers.com from data provider Dealogic show fees from European M&A deals so far this year are 7 percent lower than in 2005, and 37 percent below their levels in the boom year of 2000.
The decline reflects the squeeze on fees from increased competition, and runs counter to a survey undertaken by Financial News last month, which found 94 percent of investment bankers expected M&A fees this year to be equal to or higher than 2005.
Falling fees aren't likely to play well with bankers quivering with anticipation about the potential size of their bonuses. With the value of announced global M&A deals currently higher than in 2000, a recent report in Investment Dealers Digest suggested many M&A bankers are readying themselves for a handsome rise.
"The general view is that 25 percent seems to be the floor," John Rogan, global head of financial services at Russell Reynolds, was quoted as saying. "Bankers who are having a strong year, in hot sectors such as energy are expecting more like a 50 percent increase."
Noel Marshall, managing director of the banking and finance team at recruiter Finance Professionals, warns against over-optimism. "Only the lead deal doers are going to get the huge bonuses," he says. "We've come a long way from 2000, when people got big bonuses just for working in M&A."