How much will it cost? - Investment banking fees are typically 1-2% to raise debt and 5% to raise equity. Small deals may have a fixed fee because it takes the same effort to close a small deal as a large deal. Brokerage fees often involve the Lehman formula: 5% on the first $1 million of sale price, 4% of the second $1 million, 3% of the 3rd $1 million, 2% of the fourth $1 million and 1% of anything after.
What will an investment banker do? - A good investment banker will suggest a transaction price, help you assemble the right information, make initial contact with buyers or financing sources and intercede for your interests. Most billboard operators are good at billboard operational matters but less educated about financial and banking matters. An investment banker can help bring them up to speed.
What should I look out for? - Watch out for any investment banker who wants his entire fee up front. This usually means that he is not confident of getting the transaction done and will waste your time. I have used investment bankers and brokers at least a dozen times during my investing career to raise capital and to sell companies. In almost every case I have agreed to pay the investment bankers out of pocket costs during the engagement phase but have agreed to pay the investment banking fee only on success. They only time I agreed to a fixed fee up front the transaction never closed!
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