Bailout

Investment banking fee datapoint of the day

By Felix Salmon

The outcome of this suit — if it’s ever made public — is going to be very interesting. JP Morgan advised Consolidated Minerals when it received a series of takeover offers: as the adviser to the target company, it was pretty much guaranteed a fee, no matter who ended up buying the company. The question is just how much of a fee it was going to get.

ConsMin reckons that it agreed to a cap of A$7 million on JP Morgan’s fees in a 2006 telephone call; JP Morgan, meanwhile, submitted an invoice for A$50.8 million, and claims that in fact it’s due as much as A$86.9 million for its 14 months’ work on the deal, thanks in part to racking up new fees every time a new bid appeared. I’m sure it’s happy it doesn’t have Jed Rakoff trying the case.

(Via McKibben)

Full post as published by Macroprudential on February 22, 2010 (boomark / email).