How are ECM fees generally structured?

ECM fees are typically structured to include a percentage of the capital raised along with additional expenses incurred during the transaction. This structure allows for flexibility and aligns the interests of the investment bank with the issuer's goal of maximizing capital raised. By basing fees on a percentage of the transaction size, it incentivizes the ECM team to work diligently to secure higher amounts of financing for their clients.

In addition to the percentage-based fee, any additional expenses—such as legal fees, underwriting costs, and other related expenses—are often added to the total fee structure. This ensures that the bank can cover the costs associated with the execution of the deal while providing clear transparency to their clients regarding overall fees involved in the capital-raising process.

The other choices present structures that do not accurately reflect common practices in the ECM space. For instance, flat fees would not incentivize the bank to pursue larger capital raises effectively, and strictly time-based fees do not take into account the scale of the transaction. Lastly, while fees might be negotiated down in competitive markets, they are not typically waived entirely, as banks need to cover their operational costs.