Fees and commissions in a flotation of a private company can generally be broken down between a number of components.

The company will require a sponsor under Stock Exchange rules. The sponsor, who will receive a fee, can be either a broker or a merchant bank. The company will need a broker/financial adviser whose role is to raise the funds the company requires. Remuneration is in the form of commission, based on the amount raised. Generally commission will vary between 1 per cent and 2 per cent of the amount raised, with the percentage scaling downwards as the size of the fundraising increases. Often the commission includes the sponsor fee. On a £1 billion fundraising, commission should range between £10 million and £20 million.

Other requirements include a reporting accountant to produce the long form report which analyses the company's performance over the previous three to five years and any forecasts it has made, and legal advisers. These advisers will usually be paid on a fee-per-hour basis for work done but the total amount will usually be capped at an agreed level. In addition, a company will usually hire public relations and marketing advisers whose brief is to optimise the domestic retail demand for the shares. Fees increase where a share offer is underwritten - that is where brokers or underwriters agree to buy the shares if the offer is under-subscribed. Generally, the underwriting charge is 2 per cent of the amount raised. The charge is split between the principal underwriter (half of a percentage point), the sub-underwriters (11/4 per cent) and the broker (a quarter of a percentage point). On a £1 billion fundraising, the underwriting charge would be £20 million.