Dealing with Finders and Finder’s Fee in an M&A Deal

Something that can get in the weeds and tricky is a finder.

First, finder’s fee aren’t always the most kosher way to do things for every deal.

A business transaction is different from a real estate deal. Sometimes they go together in a deal and you must check off boxes.

A real estate deal has to go through proper protocols and chains, meaning brokers co-broke the deal with proper agreements in place that indicate a referral fee, and the state where the property is located controls the proper broker that is entitled to receive the funds from the deal.

Other types of transactions might be okay or might be more complex requiring other licenses to sell securities.

But, in layman’s terms finder’s fees are acceptable in many scenarios, and frankly, most large deals do not come about without several intermediaries making connections.

A $300m real estate deal usually happens with a broker having a contacts who has a contact who has a contact that gets the full amount in for a JV partnership or an outright buyout.

Rarely does a broker who secures the listing get the actual buyer to fund the entire deal too.

We do engage other firms to work with us on deals and typically that results in a finder’s fee of some sorts.

If we do so there are a few ways this goes down.

One way is for a basic agreement where it is a co-broker agreement. If the person is a real estate agent, then it becomes a whole lot simpler to do a business sale or real estate deal with a finder who is licensed in that state. If they are not a real estate agent, then that is where it can get trickier, because every state has its own rules. It doesn’t mean you can’t get paid through the form of a consulting fee but you need to discuss with an attorney what the appropriate thing is.

Another way

If you want to work together on a deal, we would love to see what you are working on and see how we can help you . Reach out to us.

Phone – (800) 773-1523

Email – acquisitions@Jarbly.com

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