I’m in Corp Dev at a ~$1B revenue company. I've done ~150+ acquisitions across multiple industries in my career, everything from $1M tuck-ins to $1B+ TEV. Maybe 10–15% of those have had a real investment bank running the sell-side.
We’re closing on a $75-100M TEV deal, and the banker (solid MM/LMM name, a notch below WB/HL/RJ but a known name if I said it) just sent us an invoice for their VDR fees on the deal.
I’ve never seen this on any deal I’ve worked on. Do they think this a pure money grab where they think we are too stupid and will pay this? The amount isnt anything significant, sub $100k but for that amount I could almost hire another analyst...
What do you bankers think of this?
Are you surprised by the amount of the banker sending you the bill? In a proper process, bankers loop you in when selecting the VDR. They also walk you through different options but yes, buyers typically pay for it.
standard convention is the seller pays the vdr. it's a sell-side cost of running the process, usually sitting in the engagement letter, sometimes trued up at closing. a banker invoicing the buyer directly for data room fees is not normal. at 150+ deals you'd have seen it by now if it were.
the only places buyer-pays shows up: some buy-side platforms where the acquirer subscribes to the room, or distressed deals where the seller has no cash and costs get negotiated into the pa. in a normal sell-side process, that invoice is the banker padding deal economics.
push back. ask what provision of the engagement letter covers it. worst case it's a few k and you note it. but a bank passing through costs that the seller's engagement letter should already cover is a yellow flag on how the process is being run.
It's not normal for the buyer to pay the fee as an added expense, but I've had deals where the VDR cost was included in the funds flow. Only reason it would remotely make sense why they would send you the invoice is just so you can confirm the amount for the funds flow.
What is the amount? There are some that banks avoid because they are overly expensive.
I’ve seen VDR costs below 30k frequently for a few providers
Assuming the VDR contract is with the company that you guys acquired then the fees should be part of transaction expenses in the funds flow which would come out of sellers proceeds. I have never seen or heard of a buyer paying for the VDR.
That’s said the amount sounds about right. A full sellside VDR costs about 100K these days depending on the number of contracts and how long the process ran for.
All of the seller fees (legal, banker, etc) were handled outside of the funds flow which we addressed with the bankers/seller prior to closing.
Im guessing now that the analyst was confused and sent it to us (twice). We ignored them and its been a week or so without anyone asking about it
Sounds about right. I have seen collections departments for VDR providers send analysts vaguely threatening bogus emails trying to get them to help collect fees when short-paid, may be what happened here.
Did you guys not have a seller expense escrow for these kind of items though?
you've done 150+ acquisitions over your career.......?!
Yes - I've mainly been a player in rollups within healthcare portfolio companies acquiring 3-5 doctor practices in the Veterinary, Specialized Dental, or Medicare Advantage/Primary Care space (Think sub $10-40M). Outside of our typical rollup strategy, I have worked with bankers and acquired larger groups ($500M-$1B) in the space. However, I've recently pivoted to outside of healthcare industry and into professional services
Glad it turned out to be a mix-up. For what it's worth, the answers here split on who pays, and in my experience that's because it depends on who holds the contract: normally the seller (or its banker) picks the provider and controls the room, so it's a sell-side cost. The buyer only picks it up if a cost split is written into the LOI/SPA, or if it takes over the room after closing (e.g. for integration).
If a VDR invoice ever does land on the buy side, ask for the provider's own invoice rather than a re-bill: the amount should trace back to a contract (pages, users, months), not a round number.
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