LinkedIn Groups

Group: Global Capital Sources for Conventional & Alternative Real Estate Funding Group
Subject: New comment (59) on “Why is it so-called legit funders ask for upfront fees but will not provide references?”

I am sure most of you have worked in VCs, PE firms, even the bulge bracket guys, leading law firms like Baker McKenzie/Allen & Overy, if not maybe you have gone to them as clients in any transaction/deal, Do you get a free ride? >>Do they even tell you their client history?<< I am sure most of you have a slight idea of how much these guys will charge you…eg the Lazards, KKR Carlyle, BofA Merill Lynch.

I think a lot of businesses do not understand what it takes to bring a transaction together and a lot of them want a free ride, to all the >advice and strategies< given by the Investment Bankers….In the real world it does not work like that, you have to understand it takes money to make money, if you can show me an investment bank that will not take money from you and do all the work for free and get paid on the back end, please give me the details, I will close my Private Equity Group.

Anyway what I am trying to say, is a business plan is just a story, anybody can write a good story,thats why we employ analysts/Associates to do the dirty work and they need to get paid for the reports they generate for the client. Also any consultant can just draft a business plan for a client, but in the IB world there is things like legal structure, taxation stuff…etc to bring a deal together, whilst all this has to be transparent, the client has to pay for the expenses and time.

We receive 100’s of business plans everyday, and of-course I will not get my analysts to start working on a deal without financial commitment from the client but all this has to be done face to face, the banker/funder must explain to the client the process, and the work that needs to be done, the client can get a 3rd opinion, and meet face to face…..some clients do not want their information divulged and it is unethical in the securities industry to divulge such information without consent.

Anyway guys…My experience is, there is no free ride, it takes money to make money, and a lot of us who have had the 1st hand experience in the industry know that it is a fact
Posted by Tawanda Great Mangere

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Couldn’t say this any better. Everyone claims to be an expert on what they assume is “advance fees”. But remember, a broker commission is a % of a quantifiable sum. Since analysts or advisors and other IB tasks are not brokering tasks; then what is the quantifiable sum?