Banker Wonderland
Warner Bros. and the Economics of M&A Advice
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Banker Wonderland
“We see the world speeding up. There’s more disruption, there’s more dislocation, the cost of standing still is greater today than it’s ever been.” — Paul Taubman, Founder, Chairman and CEO of PJT Partners, December 2025.
The life of an M&A banker isn’t for everyone. “I’ve missed Christmas Eve and New Year’s and the Fourth of July holidays for deals a lot smaller than this,” one former banker told the Financial Times. “When the NBA players play on Christmas Day, nobody says our holidays are ruined,” said another. “They say isn’t it great you’re in the NBA. This is as good as it gets for investment bankers.”
Next week, when most of us are enjoying some downtime with our families, advisors working on the takeover of Warner Bros. Discovery will be hard at it. Those advising Netflix on its proposed acquisition have already put in a shift, holding daily morning calls in the two months leading up to the deal being announced – including multiple calls over Thanksgiving when everyone else was at home. Now, they have to be on standby as Warner Bros. navigates a competing bid from Paramount Skydance whose own bankers will be busy too.
For some, license to duck a family gathering could be a perk. ‘Maybe you’d rather spend Thanksgiving negotiating a financing package than discussing politics with your uncle?’ suggests Bloomberg’s Matt Levine. For most, though, the motivation is commercial. Warner Bros. has promised to pay its advisors up to $225 million in fees (plus expenses). It has three firms on its roster and two of them are small. Evercore is eligible for $55 million and only employs 168 senior managing directors across its franchise; Allen & Company is eligible for $85 million and employs even fewer. For these firms, it’s a sizable ticket.1
Evercore’s new European outpost illustrates just how lucrative this corner of finance can be. In October, the firm acquired London-based Robey Warshaw, a boutique employing just five senior managing directors. The firm is known for hiring former Chancellor of the Exchequer George Osborne – at least until he asked himself what’s the most exciting and promising company in the world right now and left to join OpenAI. It has advised on seven of the largest ten deals in UK history and worked with over a quarter of FTSE 100 constituents. Over the past three years, those five bankers brought in £60 million of annual revenue ($80 million). The highest paid of them took home £40.5 million in a single record year.
Another UK firm lifts the lid on how these advisory firms go about their business. In March, the High Court adjudicated a dispute between veteran dealmaker Ian Hannam and one of his clients. Like Robey and Warshaw, who ran departments at Morgan Stanley and UBS prior to setting up their own firm, Hannam held a senior position at JPMorgan before launching H&P Advisory in 2010. A few years in, he advised Barrick Gold on its merger with Randgold Resources but when he was left off the billing as the deal was announced, he sued. In a 130-page ruling, the judge lets us inside:
It is common for investment banks to do substantial amounts of work for clients on an unpaid basis in the hope of securing appointments (and fees) on transactions. It is also common for the appointment process to be somewhat informal. This raises a number of difficult legal questions where – as here – an advisor believes it has been appointed whilst its client believes it has not.
The ruling notes that periodic fees, hourly rates or other mechanisms for calculating the remuneration of professional advisers are not the norm, rather that fees are paid as a percentage of the value of the transaction concerned, in this case around 0.30%. CIBC and Barclays were on the Randgold side of the ticket and Hannam wanted in.
One expert outlined the work involved, identifying six stages of an M&A transaction from initiation to negotiation of key terms, negotiation of detailed terms, transaction announcement, implementation and completion. A lot of effort but ultimately, it all hangs on relationships (real or otherwise):
It is a tribute to Mr Hannam’s abilities as an investment banker that Mr Thornton’s evidence was that he listened to Mr Hannam because he perceived that he was very close to Dr Bristow, and Dr Bristow’s evidence was that he listened to Mr Hannam because he perceived that he was very close to Mr Thornton.
In the end, the value of Hannam’s work was put at $2 million, rather than the $10 million he first demanded and the $18 million he subsequently invoiced for. Whether that difference reflects rent extraction by advisors is moot; the model relies on cross‑subsidy, with hours of unbilled work recouped on the few deals that close.2
Right now, the fee pool is swelling. Advisors are on course to earn close to $40 billion in revenue this year, according to Dealogic, and 2026 is shaping up to be better. “We’re running at very high backlogs right now, record backlogs… And we continue to add to that backlog,” said Evercore CEO John Weinberg at an investor conference last week. Goldman Sachs analysts project 20% growth in global M&A volumes over the next 12 months. For the market and its advisors, it promises to be a bumper year.
To see what’s driving this growth, and to delve into the economics of the advisory business (useful if the banker in your family cancels on Christmas lunch) read on.