Lyman formula

"Lyman formula is a compensation formula originally developed by investment bankers Lehman Brothers for investment banking services: • 5% of the first million dollars included in the deal in exchange for the services provided • 4% of the second million • 3% of the third million • 2% of the fourth million 6 • 1% of everything after that (over $4 million) 7: Most investment bankers now need an additional multiplier to offset inflation."

- Used in treasury and financial management for funding, investment, and risk decisions.
- Used to evaluate cash flows, financing costs, and capital structure.

- Example: Finance teams use **Lyman formula** when planning funding needs and managing cash and risk.

- Why it matters: Supports liquidity and risk control and improves the quality of financing and investment decisions.