Finder's fee arrangement in search fund?

searcher profile

November 12, 2023

by a searcher from Harvard University - Harvard Business School in São Paulo, SP, Brasil

Hi, everyone. Has anyone worked with personal/professional contacts in sourcing deal offering a finder's fee? Is that a usual practice in search fund? I think it makes sense, but I am new in searching and don't know if that is a valid practice. Many thanks

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commentor profile
Reply by a searcher
from Western Michigan University in Grand Rapids, MI, USA
Finders fees are fairly common on the buyside. There are 2 categories: professional and referral. Professional is when you engage someone who is going to dedicate time to your specific search criteria. Their fees are a little higher and may have some type of monthly/annual fee.


Referral is when you engage someone who isn't going to necessarily dedicate time to your search but they come across deals that they will send your way. Their fees tend to be lower and purely based on the deal closing.

The most important thing is to factor those fees into your analysis of the transaction so they can be funded.
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Reply by a searcher
from American InterContinental University in 930 Thomasville Rd, Tallahassee, FL 32303, USA
thanks ^redacted‌, for me ^redacted‌ I do a flat 3% of enterprise value (less a small retainer) for the search. If I am tasked with also helping to finance the deal, I look for 3% on equity and 5% on debt. I also typically rebate a % of my fee's into the NewCo if possible for skin in the game. I know its not the standard, but I rather work with a handful of serious searchers per year and actually get the deals one.
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