The survey showed that executives have an insufficient understanding of the fact that differences in the calculation basis for M&A advisory fees may affect the seller's final net proceeds. The survey was conducted by M&A Capital Partners and covered 506 representative directors.
M&A Capital Partners conducted a survey of 506 representative directors with experience considering or conducting M&A transactions for the purpose of selling a company or business, titled “Survey on M&A Fees and Sellers’ Net Proceeds.” The results showed that many executives do not sufficiently understand the differences between fee calculation bases.
The survey identified two methods for calculating fees, the share price basis and the total assets transferred basis, and showed that nearly 70% of executives do not sufficiently understand the difference between them. Even at the same fee rate, the choice of calculation basis may affect the seller’s net proceeds.
In addition, more than 70% of executives said they would want to confirm the calculation basis when selecting an M&A advisory firm, while 77.0% said they wanted to know their net proceeds before signing a contract. When making future selections, it is considered important to confirm not only the fee rate but also the basis for the calculation.
The article makes the full survey results available free of charge and states that understanding the fee structure is an important consideration when evaluating an M&A transaction.