Every deal, it seems, needs an army of advisors. Investment banks, law firms, consultants, and strategic advisors circle like remoras on a shark. The fees flow upward. The commissions compound. And here's what should trouble corporate law practitioners and their clients alike: the current incentive structure rewards transaction volume and deal completion far more generously than it rewards asking difficult questions about whether a deal should happen at all.
This isn't a new observation, but recent headlines about regulatory interventions in major transactions remind us why it matters. When government actors find themselves stepping into private M&A deals, or when asset freezes target capital market entities, we might ask: where were the advisors asking whether this deal passed the ethics test, not just the financial test?
The advisory industry thrives on a perverse incentive. Completion fees dwarf diligence fees. A lawyer who says "this deal is risky and we should slow down" generates far fewer billable hours than one who helps close it. An investment banker earns their eight-figure bonus when the deal closes, not when it prevents reputational or legal catastrophe down the line. This creates a subtle but powerful pressure to be a transaction facilitator rather than a transaction critic.
Consider the career trajectories. The partner who closes twelve deals in a year earns promotion and prestige. The partner who killed three problematic transactions because they raised governance or compliance red flags? That partner's book of business looks smaller. Client relationships might suffer. Revenue numbers disappoint the C-suite. In a business driven by billable hours and transaction fees, the incentives are brutally clear: keep the deals moving.
Corporate clients, for their part, often shop for advisors who will tell them yes. If your primary counsel raises concerns about a target company's regulatory exposure or governance structure, you can hire a different firm. If your investment bank suggests waiting for more diligence, you can take your mandate elsewhere. The market selects for advisors who deliver transactions, not hesitation.
The compliance apparatus exists, certainly. Advisors perform due diligence. They review regulatory filings. They represent their clients' interests within legal bounds. But procedural compliance and substantive wisdom are different things. A transaction can be legally permissible and financially profitable while still reflecting poor judgment, excessive risk-taking, or misaligned incentives.
What gets lost in this ecosystem? The voices suggesting that some deals destroy value rather than create it. The advisors recommending against transactions that prioritize short-term gains for deal participants over long-term stability for the corporation. The law firms willing to sacrifice a fee to protect a client from its own worst impulses.
This matters because it shapes behavior up and down the corporate hierarchy. General counsels learn that the advisory world expects them to want deals done. Board members hear from advisors incentivized to make transactions happen. Shareholders eventually face the consequences of deals that should never have closed.
The solution isn't regulation. It's recognition. Corporate boards and general counsels should notice which advisors actually push back, ask hard questions, and sometimes say no. There's real value in an advisor willing to cost themselves fees to protect your organization's long-term interests.
The market has created a system that rewards transaction velocity over transaction wisdom. That's not inevitably corrupt. But it is systematically biased toward saying yes when saying no would sometimes be more valuable.
Those incentives deserve scrutiny.