The intrinsic value of a company is obtained by conducting a valuation of a business, rather than by looking at comparables or other technical analysis. The valuation method use to determine the intrinsic value of the company can be different depending on the type of company being analyzed. For example, the capitalization of earnings or cash flow...
The Lehman Scale is an industry accepted formula used by investment banks, M&A advisory firms, and business brokers to calculate the success fees on a sell-side (or sometimes buy-side) engagement.
The Lehman Scale is calculated based on a percentage of enterprise value as follows:
5% of the first $1,000,000, plus
4% of the second $1,000,000, plus,
3% of the third $1,000,000, plus,
2% of the fourth $1,000,000, plus,
1% of the remaining total.
The double Lehman is another variation of the above fee structure where the percentage increments go from 10%, 8%, 6%, 4% to 2%. Most investment banking engagements would also include a non-refundable work fee and a minimum level fee should a transaction close regardless of the transaction size. The size of the deal dictates how negotiable these percentages are.
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