This is one of those lessons, we suspect, that banks will have to learn over and over again.
If you do work in any way that involves the government, you might get screwed ut of your fee. The latest (possible) victim of this attitude is boutique investment bank Evercore Partners, which advised GM in its bankruptcy filing.
Detroit News:New York-based Evercore is seeking a $30 million transaction fee for the sale to a new GM owned by the U.S. Treasury and the same bonus for a recapitalization of the bankrupt automaker, the Ad Hoc Committee of Consumer Victims of GM said in the filing. Those payments would come on top of two years of monthly payments totaling $9.6 million, the committee said.
The compensation sought by Evercore is disproportionate to any benefit that has been or could be conferred on the debtors’ estates, the group said in the filing.
“Evercore neither procured the buyer nor had any material impact on the terms of the transaction, which were set by the Treasury before the filing,” the request said.
Is it true that Evercore created no meaningful impact? We have no idea, but it’s probably not realistic for a company the size of GM to go into bankruptcy, with all that entails, without some kind of aid and advice from a bank, even if Steve Rattner is holding the company’s hand through the process.
Without passing judgment on this particular case, all we’ll say is, no bank should get involved in any taxpayer-related enterprise, and assume its fees or compensation is safe.