Compensation for bringing in a deal as analyst

Boutique_IBer

WSO

I am an analyst a boutique IB firm in a niche market. I have a close connection that tried to selling his company with a Wall Street IB but they decided to stop working with them because long story short they felt like the IB was trying to just push the deal and collect the pay check. After a few meeting with CEO, MP's and myself, we are taking them in as a new client. This will be the biggest deal our firm has done if we manage to close on a sale. The project is just getting started and how should I approach the CEO about compensation? It's a $500M+ valuation and we will take about 2.5% success fee as well as a monthly retainer. It's a small firm with less than 15 people and even less working on the project. My job is doing all the financial analyst, valuation, helping with the CIM, creating a buyers list and anything in diligence, a lot of responsibility. My previous position at a VC firm, we we brought in a buyer for a startup, we took 10% of the deal but deals were never over 8 figures. Would asking for compensation around $1,000,000 be too aggressive?

1m!? Really?

Yes. Any amount over $0 is aggressive since you didn’t have that conversation on the front end. But on a more useful note, I think asking for =8% is not a bad open but there is no way they give that to you. I’d expect an extra $1-300k

Depending on how “close” this connection is to you, you could ask him/her, if they are really close to you, to require an “originator fee” to be paid to you.

The project is just getting started and how should I approach the CEO about compensation

You should learn to write better. This weird sentence above is the worst thing I've ever read. 

Also, LOLOLOL yes $1m is too much. You're an employee, not a partner.    

Too late man, should have had this chat way way earlier

You'll get a pat on the back, maybe a small sourcing bonus of 10k-20k, and keep your job / maybe fast tracked most likely.

I brought in an investor for my first IPO that generated meaningful revenue for the team through my own built connection as an Analyst 1 and wasn't compensated at all for it. Needless to say I recruited for other other jobs, dipped and never looked back. 

I echo the above posts to start this conversation with your senior immediately, before everything gets too late. I would imagine the internal process for approving a originator fee would literally be only requiring the owner's nod, differently than other platforms. Obviously there'll be some sort of negotiations between you and your firm regarding the exact % to be paid out to you so be prepared for that. In the end 1 mil is 1 mil and these chances to cash out do not happen regularly especially at junior level. 

The conversation you need to have is with your best friend’s dad. If he insists to your firm that you get a piece, that’s your best bet of getting a piece.

Ignore title. I think what people are missing is that OP is at a boutique. I have been in this situation myself, though it was a $50M raise at a 6.00% fee ($3.0M) that I instigated. I was set to get a smooth 20% but on half of the expected fee ($1.5M) because we have to pay counsel, salaries, blah, blah, blah per my boss. I'm sure he doesn't net half of the fee out before figuring out his commission for his deals, but $300K sounded reasonable to me as a 25 year old. Deal never closed and I nearly blew my brains out in a dark two week bender but that's another story. 

I cannot think of a good reason why you would not ask for a fee or get one for the matter given how much value this deal would drive. Couple tips:

• Stealing this point from someone above - try to work something out with the potential client BEFORE your boss basically usurps the account from you and becomes the touchpoint. He'll still ultimately become the touchpoint for the client, but it will help if that client makes it clear that he's talking to your bank because of you. 
• As above, your MD will ultimately become the touchpoint for this client. Once that happens he and everyone will see it as his deal. You need to talk commission up front when it's still clear to the MD that you are bringing this one to him. Especially if he's having a slow year, splitting off a small commission for you and getting some himself is a great deal for him. Once he takes control of the deal he's going to start feeling like "why would I give this kid anything?" 
• When you have the commission convo make sure you discuss future economics too. Don't just focus on this one deal and then end up working with this company again down the line and you don't get a fee, or you end up in this position again and have to have the convo again. Set the terms early. 
• Never stop trying on the Biz Dev side. It will drive your bosses crazy if you're throwing ideas at the wall, until you bring in a fee and then they'll give you more respect and leash. Just be ultra respectful of feedback and make it clear that you're doing this stuff on your own time and prioritizing your execution work first and foremost. 
• If you aren't getting a commiss and aren't sourcing get the fuck out of boutiques. That is the ONLY way the boutique lifestyle makes sense as a long term plan. Otherwise go find somewhere where you can get rich off of salary & bonus.

I worked at a small firm such as yours. We got 10% if sourced a deal. For all those at BBs and more institutionalized MMs you're probably not aware because this isn't' how it works at larger firms. However, at smaller firms its catch what you kill. 

That said, you severely weakened your hand by not discussing this prior to making the intro.

You should definitely get a massive payout here and should in line with whatever formula and MD or whoever gets for sourcing a deal. 

Honestly, if it was me, and I was getting iced after talking about it, I'd probably speak directly to my CEO contact. 

If its your best friends dad I'd just talk to him and have him request an origination/sourcing fee on your behalf. 

I would ask for a minimum 10-20% success fee in a legal contract. If they rebuke threaten to leave if they still don't play ball. Talk to your client about being paid as a consultant by them and effectively reducing the fees they pay to your firm. 

Consulting within your firm would be ideal as you can play with various tax loopholes. If your firm is making $12.5M+ you should atleast get $2-2.5M.