Searcher M&A and Debt Financing Fees

investor profile

March 10, 2024

by an investor in New York, NY, USA

We're looking at an add-on acquisition of a larger business, which will require a full debt recapitalization. Investment banks have presented a 2.5% closing fee for debt capital advisory services, which would take a lot of work off an already full operations and M&A plate. One consideration is fully self-executing that debt raise internally, but it brings up a question of appropriate compensation for the sponsor.

Wondering what is "market" on closing fees for a searcher / sponsor, for add on acquisitions and debt / equity capital recapitalizations? Is a 2-2.5% fee on the total uses of the new deal a reasonable expectation? Are those fees paid in cash or rolled into additional equity in the company?

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commentor profile
Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA
It depends on how much debt you are looking to raise and how complicated the transaction is. Happy to take a look and provide some advice. You can reach me here or directly at redacted Good luck.
commentor profile
Reply by a professional
from University of Notre Dame in New York, NY, USA
A 2-2.5% success/closing fee is market for smaller deals. As deals get into the lower middle to middle market, I've seen them in the more 3-5% range.
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