Investor & searcher split due diligence cost

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April 07, 2025

by a searcher from Western Michigan University - Haworth College of Business in Novi, MI, USA

Has anyone closed a deal with an investor in a hybrid type structure between self funded & traditional, particularly with some of the due diligence cost being covered by the investor?

Myself and a few of my searcher friends are seeing a few deals ($1.5MM+ ebita) where this might be interesting. Would be great to connect with any searchers or investors

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Reply by a searcher
in Cambridge, UK
Often your professional advisors will agree to be paid from the company post-acquisition. The sticky part is what happens if a deal falls over just before the finish line after costs have been incurred. In this case they will sometimes agree to roll the fees into your next deal, but this needs to be discussed before you engage with them.

Investors can put their mind at ease if they are reputable and have done with with the DD providers before. Again, something to talk with your investors about.
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Reply by a searcher
from INSEAD in London, UK
You can try to ask investors to backstop some of the deal fees once equity term sheets have been signed but I think this is very deal dependent.
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