Finders Fee - Typical Terms

searcher profile

June 28, 2023

by a searcher from New York University - Leonard N. Stern School of Business in Tampa, FL, USA

Hi all,

Can anyone share typical recent finders fee terms (percentage of enterprise value, different tiers for broker lead vs. proprietary lead, etc.) that worked in incentivizing intermediaries to help source proprietary deal flow?

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commentor profile
Reply by an intermediary
from Arcadia University in Forest Hill, MD, USA
Who are you paying finders fees to? Are they licensed? If they are not licensed, you need to be careful about paying success-based fees or commission like fees. Depending on the transaction, real estate rules and securities rules are very strict about paying unlicensed or unregistered finders. I would pay what seems fair and what they agree to. Just be fair and cultivate the relationship. Finders could also find new customers and new vendors. So; they need to believe they will be compensated fairly for sharing their connections.
commentor profile
Reply by a professional
from The Johns Hopkins University in Basking Ridge, NJ 07920, USA
Given that your comment is general, depending on the facts, you should always be careful to define the terms in these scenarios to avoid implication of SEC/"broker-dealer" considerations. People play fairly fast and loose with these concepts and you are free to accept the risks of doing so, but the issues are more nuanced and prevalent than many realize.
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