Success fee

Advisory work is normally priced as a small monthly retainer plus a success fee, expressed as a percentage of transaction value and payable at completion. Retainers are usually credited back against the success fee, so they are best read as a commitment device rather than as revenue.

The percentage typically falls as deal size rises, since the work does not scale in proportion to the value being transferred. Beyond that, terms are negotiated and vary widely, so treat any specific rate you see quoted as an illustration rather than a market standard.

The structure has one large consequence for the firm and one for the junior. For the firm, revenue only arrives from mandates that are both won and completed, which forces it to be in front of far more situations than it will be paid for. For the junior, that is exactly why pitch material is the largest single block of work and why most of what you produce never becomes a transaction.

It also creates a tension worth being able to name. An adviser paid on completion is paid to get a deal done, which is not automatically the same as advising the client not to do one. Boards manage this with independent advice, and sometimes with a separately paid opinion on fairness, precisely because the incentive is visible to everybody involved.