Treasury’s tough new rules on corporate inversions are unwelcome news for beleaguered investment bankers, the Wall Street Journal reported today. The decision by Pfizer to cancel its $150 billion merger with Allergan PLC means that investment bankers who worked on the deal will lose out on hundreds of millions of dollars of fees. Late last year, research firm Freeman & Co. estimated those fees would amount to between $280 million to $350 million. Pfizer’s advisers were Goldman Sachs Group, Centerview Partners, Guggenheim Partners and Moelis & Co. Freeman & Co. estimated it would pay them between $120 million and $150 million in fees. Allergan, advised by JPMorgan Chase & Co. and Morgan Stanley, was expected to pay between $160 million and $200 million. Advising on tax inversions has been a lucrative business for investment bankers. U.S. investment banks have been advisors on over $700 billion of announced tax inversion deals since 2011, according to Dealogic. Last year alone, U.S. advisors were involved in announced deals valued at $240 billion. Fees on inversions since 2011 have amounted to $1.3 billion, Thomson Reuters estimated. Such deals make-up around 5-6 percent of the overall mergers and acquisitions market, according to Credit Suisse analyst Ashley Serrao.
