Many prospective clients think that investment banking is relatively easy. Their thought process follows: we (1) have lunches and dinners to woo them; (2) have the clients put together all the material for a book (Confidential Information Memorandum); (3) make a few phone calls to find investors or buyers; (4) reach basic accord on the deal terms; and, (5) step aside to let the lawyers negotiate the final agreement. Does not seem too taxing, does it?
While oversimplified, each of the above basic activities usually happens. However, a typical deal often consumes at least 6 and often 15 months to complete. And nearly every day is consumed with a myriad of detailed analytics and communications. In fact, dividing the retainer or advisory fee by the man-hours applied usually equates to an hourly rate of about $5-$10. Not a lot for experienced, well-compensated talent.
When a deal closes, the IBanker need not justify how much time was spent on the deal. They were hired to consummate a transaction. And, whatever the contractual agreement for success fees should be honored, without the client trying to reduce the amount after the fact and contrary to the legal agreement.