Microsoft-Yahoo Bankers: Worth $300 Million in Fees?

Don’t you wish you worked on Wall Street? Lord, we do. Assuming M&A fees of just under 1 per cent of the transaction value, Yahoo and Microsoft (YHOO, MSFT) bankers will be splitting up a pot of around $300-$400 million. (Sure, the deal is huge, so the Wall Street haul could be less, but don’t think these guys are going to work for nothing.)

Who will be taking home chunks of that $300 million + change?

Yahoo (target):

  • Goldman Sachs
  • Lehman Brothers
  • Moelis & Company

Microsoft (Acquiror):

  • Morgan Stanley
  • Blackstone Group

That’s $80 to $100 million apiece. Could they possibly be worth it?

Well, let’s say the combined minds of Goldman, Lehman, and Moelis figure out how to hold Microsoft up for $1 per share more than Joe’s M&A Shop would have. With 1.4 billion Yahoo shares outstanding, that’s added value of $1.4 billion. Yahoo’s share of the total fee pot is likely to be on the order of $100-$200 million. So, to justify their fees, Goldman, Lehman, and Moelis need to wring another 7 to 15 cents per share out of Microsoft. We pray this is within their capabilities.

And Microsoft advisors Morgan and Blackstone? Same maths. Save 20 cents per share on the Yahoo buy, and you’ve paid for yourselves and then some. So get cracking, boys (and girls)!

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