Is there any way to take a success-based finder fee without being licensed?

searcher profile

April 20, 2024

by a searcher from University of Colorado at Boulder in Los Angeles, CA, USA

During my search for a wide variety of businesses, I often come across deals that I know would fit large aggregators perfectly (for example Constellation Software). While I am all for the passing of deals from one searcher to another for no fee, there are certain deals that appear to be perfect fits for these larger buyers and it would be great to take a small percentage to help fund continued search efforts.


When I worked at larger rollups we signed many finder agreements from the buy side, but it seems to me that unless I am registered as a broker-dealer, the SEC does not condone accepting success based payments.

Does anyone have any knowledge or experience on this matter?

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commentor profile
Reply by a searcher
from University of Central Florida in Gainesville, FL, USA
Unless you have it under LOI, there’s not a lot of quantifiable value there as an outsider trying to make introductions. If you have a process for finding these off market though, then you could approach one of these aggregators, pitch them on a sourcing engagement and try to capitalize on it from there.

So many funds are looking for proprietary deal flow so they may be open to it.

Either of these routes should not involve licensing since you are working on the buy side. It’s the sell side advisory that needs licensure.

Disclaimer: I’m not an attorney, this isn’t legal advice.
commentor profile
Reply by a searcher
from Baylor University in West Point, NY, USA
as long as it's a majority sale (>51%) you can call it a "Milestone Bonus" and set it at a % of the "expected" transaction rate and you should be good. Can't do minority sales. As always, CYA (call your attorney)
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