Why Do Structured Finance Advisors Require A Retainer Fee?
Questions about retainers often come from companies operating in markets where capital markets and financial intermediation services are less developed. In these environments, borrowers sometimes expect advisors to function as direct lenders or banks. That is not how institutional financing works. Financely is not a lender. We are a structured finance advisory and capital placement firm. Our role is to prepare, structure, and present transactions to lenders and investors. The financing decision itself is made by those institutions after reviewing a properly prepared transaction file.
This distinction matters because lenders do not review incomplete or loosely described deals. Banks and credit funds require fully documented underwriting packages before they will allocate time to a transaction.
Why Lenders Require A Fully Prepared Transaction File
A lender reviewing a transaction expects a complete underwriting file. This file is often called a lender memorandum, credit package, or investment memo depending on the type of institution. Preparing that file requires professional work performed before any lender introduction takes place.
For this reason, advisory mandates in structured finance operate under a retainer model. The retainer funds the preparation work required to bring the transaction to institutional standards.
Professionals Involved In A Financing Mandate
Structured finance mandates require multiple specialists. These professionals are typically engaged on an hourly basis or through advisory contracts.
Structured Finance Analysts
Financial modelling, credit analysis, and underwriting preparation. Typical professional rates range from $150 to $300 per hour.
Transaction Structuring Specialists
Capital structure design, collateral arrangements, repayment waterfalls. Typical rates range from $300 to $600 per hour.
Compliance And Sanctions Specialists
Sanctions screening, counterparty verification, jurisdictional risk analysis. Professional rates typically range from $200 to $400 per hour.
Legal Advisors
Review of contracts, collateral security documentation, and lender covenants. Law firms involved in financing transactions typically charge $400 to $900 per hour depending on jurisdiction.
Documentation Required For Routine Financing Transactions
A typical lender-ready transaction file requires a substantial amount of documentation. Preparing these materials involves time, analysis, and professional review.
| Document | Purpose |
|---|---|
| Financial Model | Projection of revenues, operating costs, and debt repayment capacity. |
| Information Memorandum | Institutional presentation describing the transaction structure. |
| Corporate Financial Statements | Verification of the borrower’s financial capacity. |
| Commercial Contracts | Purchase agreements, supply agreements, or offtake contracts. |
| Risk Analysis | Market risk, counterparty risk, and operational risk evaluation. |
| Compliance Review | Sanctions screening, AML verification, and jurisdiction checks. |
Preparing these materials typically requires tens of hours of professional work before lenders are approached.
Optional Transaction Infrastructure
Depending on the transaction structure, additional elements may be required.
Special Purpose Vehicle Setup
SPV formation for project finance or asset-backed transactions. Typical legal and administration costs range from $5,000 to $20,000 depending on jurisdiction.
Trustee Or Security Agent
Independent trustee holding collateral on behalf of lenders. Annual trustee costs typically range from $3,000 to $10,000.
Escrow Or Controlled Accounts
Cash flow control structures required by lenders. Bank fees and administration costs may apply.
Independent Technical Reports
Engineering or operational assessments required for infrastructure or project finance transactions.
Why Clients Sometimes Resist Retainers
Many inquiries come from companies that have never previously raised institutional capital. They often assume advisors simply introduce lenders and collect a success fee. In reality, lenders expect advisors to deliver a complete underwriting package before reviewing a deal.
When a borrower approaches multiple advisors without allocating an advisory budget, no firm can realistically dedicate the resources required to prepare the transaction.
Frequently Asked Questions
Why must the retainer be paid before lender introductions?
Because the lender introduction happens after the transaction has been structured and documented. The retainer funds the preparation work required before lenders review the deal.
Does paying a retainer guarantee financing?
No. Financing decisions are made by lenders. The retainer guarantees that the advisory work required to prepare and present the transaction will be performed.
Why can't advisors work purely on success fees?
Success-only mandates would require advisors to invest significant time and professional resources without any client commitment. Professional advisory mandates therefore include retainers to secure the engagement.
What does the retainer demonstrate?
It demonstrates that the borrower has a serious transaction, a defined advisory budget, and intends to proceed professionally with the financing process.
Submit Your Transaction For Review
If your company requires structured finance, trade finance, or capital raising advisory services, you may submit your transaction through our deal submission portal.
Submit Your DealFinancely provides advisory services related to structured finance and capital raising. Financing decisions are made solely by third-party lenders and investors following their own underwriting procedures.