Compensation For Bringing Me a Company

by a searcher from University of Gloucestershire

3 years ago

A fellow searcher has brought me a very nice business which he has under LOI and can't commit to for legitimate reasons. 

I am a single sponsored searcher and have no major acquisition funding commitments and I have room for flexibility in structuring my fellow searcher's compensation.

What are the typical forms of compensation for bringing someone a business? What are the positives/negatives to giving equity vs a fee? What ballpark should I be expecting to offer as compensation?

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7 comments

professional from University of Illinois at Chicago

% on the Lehman Scale, or a flat fee are the two most common things. In this case, I think something more like equity might be worth it based on the fact that you have a signed LOI.

3 years ago | like reply | 0 likes

searcher from University of Illinois at Urbana-Champaign

Most buyside brokers I've talked to charge a % of the deal on a sliding scale, that could be applicable here especially if the original party just wants out. I'd be careful that you're not stepping on any NDAs though. I might be wary of a bait and switch if I was a seller. Why can't the original seller close the deal? Can't finance? Can't operate?

3 years ago | like reply | 0 likes

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