NEW YORK - Investment bankers are changing how they ask to be paid in a bid to preserve and boost fee revenue they generate from advising companies on mergers and acquisitions, as more big deals face challenges by regulators.
At stake is the dealmaking revenue of the top investment banks in North America and Europe. While banks that are listed on the stock market do not break down the source of their fees in their investment banking revenue disclosures, the dealmakers said that fees paid even when transactions fail have helped boost profits this year amid a flat market for mergers and acquisitions and a rise in the challenges to deals.
Political opposition amid rising economic protectionism is also a growing risk and has led, for example, to U.S. officials casting doubt on whether Japan's Nippon Steel can complete its $14.9 billion acquisition of U.S. Steel amid U.S. labor union opposition.) and Morgan Stanley, are pushing to be paid as much as 25% of the breakup fee on some transactions, depending on the transaction's size, according to the dealmakers who were interviewed.