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Bringing Deals to Banks and Getting a Cut
by tylderdurden
(Monkey,
48 
So I know of this company that is looking to raise some money ($50 mill or so) by issuing equity (founders want a partial exit) and it's not really what we do seeing as we're not an ib.
Now, with something this small, I have some contacts I can make introductions to, but what is the best way to go about doing it so that I can get a cut of this deal? What should I expect my cut to be?
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One very rough proxy that
One very rough proxy that I've seen used as a "finder's fee" would be the Lehman formula (to be paid out as deal fees by the seller):
5% of first million
4% of second million
3% of third million
2% of fourth million
1% of deal value above four million
For a $50 mm deal, this would net you ~$600k. Actually getting this amount, of course, is much easier said than done.
Isn't the Lehman formula for
Isn't the Lehman formula for the actual deal closing fees (i.e. what the bank gets paid for the services they perform), not just a finder's fee?
you'd probaby get a cut of
you'd probaby get a cut of the fees earned by the underwriter - 10/20%, totally situational though.
I thought underwriters
I thought underwriters usually received 7%?
At least for equity - have
At least for equity - have no idea about debt.
...
Isn't the Lehman formula for the actual deal closing fees (i.e. what the bank gets paid for the services they perform), not just a finder's fee?
This was the original intent. I've seen it used twice as a finder's fee, however (and in one case the finder's fee was actually larger than the bank's fee).
huh, interesting.
huh, interesting.
tylerdurden PM me...
feel free to PM me if you wouldn't mind providing me a little more information. my firm does pay a referral fee to anyone who brings us a deal we close. its loosely based on the aforementioned Lehman formula. like someone mentioned before, sometimes its easier said then done, but if we close the deal, you get the money, no questions asked.
good day.
To further this question, I
To further this question, I am curious, if you work at a firm, FYI I don't work with any of these, just interested in the scenario, but let's say you work at william blair. You know a firm that looks to raise capital, and know that if you bring it to WB you get a pat on the back, no finder's fee, and probably are put on a better track at work. However, if you go to let's say HLHZ you get this fee of 600k (or 60 - 120K w/e it is) as written above. How does this scenario play out if WB find out are you gone instantly? Is this ever done? Or can it even come back to you?
Please don't pm me with a pitch for your firm this is just a mock case I am curious about.
Buyers/PEG's will sometimes
Buyers/PEG's will sometimes pay the finders fee like a lehman structure, banks do not generally. Banks will pay a % of the success fee for a referral if the deal closes sometimes 10-20% as indicated above.
You get caught showing a deal to another bank for a fee and you are out on your ass, imho.