Which Firms Command the Highest Private Equity Fees?


April 9, 2014

The ranking of banks and private equity firms compiled by Thomson Reuters on an annual basis isn’t about the firms that charge the highest commissions, but about which ones have earned the most based on the deals they’ve done and how often they’ve been appointed by external parties to make deals happen.


Thomson Reuters compile the data for each quarter. The latest results, that have been reported this week by the Financial News website, show that banking giant Goldman Sachs commanded the highest private equity fees in the first quarter of 2014.


Close behind Goldman was JPMorgan Chase & Co. It was reported that the total earnings Goldman made from financial sponsor clients was $302million for the first quarter. For Goldman, this represents a healthy increase (20%) on what they made across the same period 12 months ago. JPMorgan were the biggest movers, however, with fee earnings increasing by 45%.


While $302million seems like a large sum to be earning, it represents only 11% of the total earnings by investment banks in the first three months of the year, which total $3.4billion in total. This figure itself is a 19% increase on the equivalent from last year.


Given that global private equity markets haven’t been as busy as many predicted at the start of the year, it will come as a surprise to many analysts that firms have attracted such an increase in fees. However, the early 2014 trend towards IPO’s is what has primarily driven these fees and earnings.


It could also well be the case that with so much dry powder waiting to be invested, firms are being appointed to find and secure the best private equity deals before funds expire and monies are to be returned to investors. It will be interesting to see how fee earnings develop throughout 2014, and whether IPO’s will continue to be the primary presence, and how this will influence wider private equity trends.

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