Was Stephen McMahon’s Saturday’s Agesidebar story, “Advisers earn their $30m to $50m fee”, written
by the investment bankers concerned? Sounded like it.

Estimates are
that $30-50 million in fees were earned by advisers on Coles Myer’s
sale of the Myer department stores, with the lion’s share going to
lawyers and Coles Myers’ financial advisers Carnegie Wylie. “Market
sources estimate Carnegie Wylie’s pay cheque may have been $20
million-plus for what was deemed a tough job. It is believed that after
the price passed $1.1 billion, it triggered a clause that substantially
increased the adviser’s percentage fee.”

McMahon (or was it someone at Carnegie Wylie?) continued:

can spend years trying to convince a board to sell or buy and only then
begin the work to ensure there is enough competition to get a top price
and get contenders through to the final phases of bidding, which can
take months. The Coles Myer process officially ran from August to last
Monday – more than six months – and that does not include pre-sale

So Carnegie Wylie, a boutique investment bank, earned a staggering $20 million for six months’ work.

taking nothing away from John Wylie and Mark Carnegie (who along with
UBS and Caliburn are the hottest advisers in the country) this is an
outrageous sum of money for six months’ work advising on a trade sale.
McMahon speculates that Carnegie Wylie’s fee may have leapt from $5
million to as much as $20 million after the Newbridge bid went from
$1.1 billion to $1.4 billion. That’s a hefty incentive for presumably
not much extra work.

However, the blame for the outrageous fee
can hardly lie with Carnegie Wylie. It’s business and they would be
crazy not to charge as much as they can.

Surely this is an
issue for shareholders (remember them?). Why should executives be paid
so much when they seem unable to manage the company without help from
other people? Last year, Coles Myer paid CEO John Fletcher $4.4
million, Tim Hammon (chief corporate officer) $1.3 million and Fraser
McKenzie (CFO) $1.3 million, as well as footing the bill for a large
team of in-house corporate analysts and lawyers – surely these
executives and their well-paid staff can undertake basic management
functions without paying $20 million to advisers to hold their hands.

year Myer earned a grand total of $38 million for shareholders. This
year, Coles Myer allegedly paid advisers between $30 to $50 million to
flog it off. If more than one year’s entire profit being paid as a fee
doesn’t stir up the Australian Shareholders’ Association, I would
like to know what will.