Becoming a Freelance M&A consultant is not the most common path for investment bankers. That’s no surprise: With incredibly high salaries, the risk of becoming independent can seem daunting.
But there are clear advantages to “going independent”. Flexibility, freedom, and a better work-life balance are only a few of the perks that freelance M&A consultants can expect.
With these perks in mind – how big of a pay cut does an investment banker that goes freelance need to take?
The answer might surprise you.
But first, let’s take a look at regular IB salaries for some context.
Investment Banking Salaries
While total compensation (salary + bonus) in investment banking of course differs based on region and employer, mergersandacquisitions.com gives us a good estimate for 2022 investment banking salaries.
While analysts rake in between 185k-250k, associates in top investment banks earn 300k to 500k (in some cases even 600k) in total compensation. Vice Presidents base salaries can safely be assumed to start at $500.000, with bonuses of 100% or more.
Working hours for investment bankers
This sounds pretty impressive. But investment bankers are known to work crazy hours – from 60 up to 100 hours per week, when things get really tight.
Let’s assume an average working week with 70 working hours. With 50 working weeks per year, this leads us to a nice round yearly total of 3500 working hours.
Hourly salary of employed investment bankers
When we apply the hours worked, investment banking salaries start to look slim.
Analysts will earn $52-$68 per hour worked, while associates demand $85 to $142. A well-paid Vice President would make anywhere between $142 to $285 per hour.
And this assumes a well-rounded, 70 hours a week. It’s not uncommon to work 80 hours per week on average, which could shrink the total analyst compensation to $46 per hour, or less.
Hourly rates for freelance M&A consultants
We analyzed data from 1000+ consultants on our freelance M&A platform. The result: on average, our Fintalents demand significantly higher hourly rates than average employed investment bankers.
The delta is the highest for analysts, which, on average, demand $100 per hour, while associates demand $118 per hour. Manager-level freelancers price themselves at $134 per hour, while seniors sell their services for an average of $170 per hour.
Note that these are average values – on many projects, Fintalents will demand hourly rates of $200 or even $300. And it’s still a good deal for the clients, because they pay the consultants directly – without being charged for the overhead of a large investment bank or boutique.
Click on the infographic below to view it in full size.
