Currently in equity research and my comp is base + guaranteed bonus which puts a floor on my comp, but leaves the ceiling open since any bonus earned above and beyond the guaranteed is paid out at the end of the year.
I have the opportunity to bring in an investment banking deal (know the CEO of company) into my firm in a sector that's not under my coverage.
My MD is saying that the finders fee would be applied to the guaranteed bonus which could screw me over. In this market, there's no way I'm taking chances, so what I'm going to do is negotiate to have the finders fee paid out above and beyond my guaranteed draw and if that fails, take it to another bank and get the finders fee from them.
I can't think of another way of doing this so I thought I'd throw it out there to see if any monkeys have other ideas.
Sounds reasonable, but you have to be careful that you don't get into a "selling away" situation (where you're registered with one firm but making money for another). Also, if word gets out you know you're finished at your current firm.
It's obviously not ideal to approach another firm and the finance world is a small place, but I can't think of another way of doing this without taking a huge haircut. If this deal goes through, the finders fee (based on the 5-15% that figures I've seen floating around various firms) is worth losing my job over.
The worst case scenario that I thought of is that I bring the deal into the firm and it gets applied to my guaranteed. 6 months later, I get laid off and I get SFA for bringing in the deal.
Is your relationship with the CEO good enough that you can blow up the deal if your bank tries to screw you? It seems to me you just need a way to block the deal in order to have leverage against your employer.
Anyone else have experience with getting comped for sourcing a deal as a junior employee? Really interested in this as there is a chance I may have that opportunity in the near future.
I would advice you to create a separate finders fee agreement for this specific deal. you can do this w/the other bank also, but i would advise you write in the agreement that you currently work at bank "x" and they are aware of that. this is because you don't want them using your employment at a competitor against you when its time to pay. also, watch out for anyone going behind your back and pitching the ceo directly, just in case you dropped any names w/ur MD. other options include creating ur own entity/s to represent you on paper, a bit complicated but it secures you, legally. GL
Whatever you do, get it in writing from the firm involved.
Update: Spoke with my MD and figured it all out. Finders fee would still apply to the guaranteed bonus, but anything above and beyond would be paid out immediately. Any pool bonuses would still apply above and beyond.
The company is not publicly traded and my relationship with the CEO is close enough that I could kibosh the deal - it is an IPO deal.
For other monkies that may be in this position, here's what I've learned:
Will vary on the firm. Some have a written policy and others do it on a case by case basis. If you're in research and bring in a deal and in your sector, you likely do not qualify for a finder's fee. The fee instead goes into the bonus pool and gets paid out. That's why it was important for me that the deal wasn't in my sector.
Sample policy: 5% - make an introduction to a relationship that turns into a deal 10% - you bring in a deal and do work that helps in closing that deal 15% - you have significant influence with a high level exec and influence a deal that might otherwise go to another bank
Depending on firm, finder's fees can either be off the top or bottom.
Here's what I've done thus far kicked off with the CEO contacting me: - Talked to the people around my firm that I trusted and asked who I should talk to - Talked to the managing director without mentioning my hand - Sent an e-mail to him to have a record of the conversation which he responded to and acknowledged - Had another conversation with the MD and talked about the deal (conversation I had today) - Sending another e-mail to leave a trail (BCC'ing my personal e-mail) which I will be having the MD acknowledge before I send along anything else.
I have not created a separate finder's fee agreement because I think the e-mail trail is enough, but I'm still going to talk to some lawyer friends of mine since they know more than I do.
Finder's fee when you're an employee (Originally Posted: 09/27/2013)
I plan to introduce a potential deal/project to my company and will have to negotiate a separate contract regarding my pay in this deal. Do you know how analysts are usually compensated in this situation. If by % of profits, how much %? If a fixed fee, how much? I'm sure it's based on the value of the deal. So what is the difference if the project is 2 million USD vs 10 million USD vs 50 million USD for example. Thanks for everybody's input.
http://www.trivest.com/ Business Brokers
Ask for an S-Class (new and not the s400 shit) Download Trivest Confidentiality Agreement
Download Trivest Fee Agreement
...should be a start
I have Trivest sticky notes sitting at my desk. There is literally a sketch of a car on them.
lol
Finder's Fee (Originally Posted: 06/10/2013)
I work for a small fund and spoke to a small company a couple of months ago. The company needed money, but it didn't really fit the mandate of our fund so I didn't followup with him. Oh wells, I speak to a lot of companies and he probably speaks to a lot of other funds. Anyways, I was talking to another fund and I casually bring up this company he decides to take roll the dice and puts a million into it.
I feel like since I connected the two, I should get a small piece, pretty standard. But since I haven't spoken to the company and never followed up, and the guy from the other cold called him, I'm out of luck...
What do you guys think?
Keep in touch with both of them and make sure they know you know so that they think of you next time? Nothing you can do for the moment... And honestly, how much would you get out of this? A few thousands? Probably not worth looking like a revenues-starving guy
Yeah, The relationship and keeping the network probably worth more. Still... no one likes working for free Thanks for the comment
Assuming this was a direct financing between the fund and the company (and not the fund buying the company's shares on the public market), it is generally common for a finder/referral fee to be paid for these type of situations. Not sure how much time has passed since the investment or the status of your relationship with the parties in the transaction but if the parties knew of your role, it's generally customary for a fee to be paid that is usually a % of the total investment, which obviously depending on the investment size, could be a good chunk of change...
The investment will be done probably through private placement, but has not closed, they are still negotiating terms. I have heard finder's fee ranging from 5-8%, we so are talking about a good chuck of change. Would it be better to touch base with the fund or company?
i think you just learned a valuable lesson in lieu of a paltry commission. if it's a good enough idea that you would do it but can't, get a teaser etc. and tell them up front that you can't do it, but if you find someone maybe we can make an arrangement? usually they are more than willing to.
sounds like they're doing a PIPE. 8% fee sounds a little high but not sure which geography you are in so maybe that's within range. more to your question-usually, the company receiving the financing will pay the fee, that said I would probably reach out to the investing fund first and have them inform the company that you need to be taken care of since you referred them.
from time to time, there are guys that try to double dip and collect a fee from both sides. unless it's a unique situation, generally don't be that guy...
Thanks for the replies everyone. Chatting with my boss, I think its a lost cause. But definitely learned something today.
Finder's Fee for banker sourcing deal to his bank? (Originally Posted: 03/04/2008)
If a banker sources a deal to his bank (M&A advisory, capital raise, etc.), what are typical finder's fees paid to that banker?
Doesn't it just reflect in your bonus? I'm not sure if there is a direct "finders fee" .. but then again I am not speaking from experience, only speculation.
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Especially for non-officers, I don't know of any banks that offer finders fees. yes, maybe you'll get a little bump in your bonus but that's about it. There are also rules that prohibit specific fee sharing arrangements for people who are not registered reps (Series 7).
Almost all analysts / associates have taken and passed the Series 7.
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yes, I know if I refer a candidate who gets hired I'll get $5K or something. And maybe there's some similar policy for providing chump change (a few grand) for a deal referral, but pursuant to FINRA regulations a non-registered rep cannot get a contingent fee or % of a fee made by a broker dealer.
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