Investment bankers seek safeguarding fees amid increased regulatory challenges.

From Investing.com: 2024-07-22 21:06:36

Investment bankers are adapting their payment structures in response to increased regulatory challenges facing big deals. Banks are seeking fees even if transactions are blocked, taking a larger portion of breakup fees and charging more for services. US antitrust regulators filed 50 enforcement actions against mergers in the last 12 months.

In Europe, the European Commission has issued prohibition decisions against deals, compared to previous years. Political opposition and economic protectionism are rising risks affecting mergers, seen in US skepticism of Japan’s Nippon Steel acquiring US Steel. Top banks are pushing to receive up to 25% of breakup fees, significantly higher than historical averages.

Investment banks are increasingly reliant on fairness opinions for revenue. In the case of JetBlue’s failed takeover bid for Spirit Airlines, Spirit’s advisers negotiated a 25% cut of the termination fee paid by JetBlue. Similarly, on GTCR’s deal for Worldpay, lead advisers JPMorgan and Goldman Sachs took a 25% cut of total fees, a significant increase from previous standards.



Read more at Investing.com: Analysis-With no big deal safe, investment bankers move to safeguard fees By Reuters