Lehman's Scale for Buyer's Fee - Self Funded Searcher

September 14, 2024

by a searcher from University of Texas at Austin in Austin, TX, USA

Does anyone have feedback on the business broker value-add for this fee structure for a ~$5M acquisition of an business? Minimum fee is +$160k and has stepped reduction in rate after the first $2m. This is for a well-known, nationwide M&A firm.

I am geographically limited in my target area to a specific region and I have seen local brokers with a 2.5% fee.

Any insights on value-add services, difference in quality of representation, or red flags? Will a larger firm be able to provide more greater, quality deal flow so that I can move faster?

I am relatively early stages (1.5mos in), have my target statement, and buyer profile prepared -- currently engaging with brokers and equity backers. Mid-career MBA, previous 10yr business owner, 10yrs corporate experience - strengths in operations, sales, and digital transformation.

Reply by a searcher
from Emory University in Atlanta, GA, USA

I have leveraged Calder Capital and they have been a pleasure to work with. There are a lot of reasons you might consider a buy-side broker. Personally, I feel that having them as a partner alongside other search avenues increases the likelihood of achieving my search objectives and worth the fee. Ultimately you need to think about the time to your personal or firm goal and how much that is worth to you.

Reply by an intermediary
from The University of Chicago in Chicago, IL, USA

Most brokers do not have a buy-side practice with depth. You want to go with a broker who has systems and processes well laid out for buy-side. Calder is a good one. I know the owner in Michigan. I did not know about TX presence until I saw ^redacted‌ response.

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