Questions on Capital Raising Fee/Finders Fee
I am teaming up with someone who has been doing one-off deals for PERE for a long time. What is the finder's fee for capital raises in the $25-$50 Million range? Is the Lehman Formula used?
I am teaming up with someone who has been doing one-off deals for PERE for a long time. What is the finder's fee for capital raises in the $25-$50 Million range? Is the Lehman Formula used?
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Career Resources
Not sure how it translates to PERE, but common terms seen for advising on capital raising for emerging growth business are:
Greater of: i. *5% up to (x) *6% of any increment over (x) of total consideration paid by investors ii. (Minimum fee)
Ten year underwriter warrants for 3% of equity raised, exercisable at 110% of price of shares issued to investors
Compensation for Sourcing CRE Deals (Originally Posted: 08/22/2017)
I am talking to a regional CRE operator that was just recapitalized about sourcing deals for them. The firm doesn't want to hire someone full-time but would prefer to pay a fee + equity split for deals that close. I will be negotiating the details soon, however the issue I'm running into is the firm's target hold which is 20-30 years. How do I get adequately compensated on deals that the firm either never sells or won't sell for a few decades? To give you some perspective, deal sizes are likely in the $1MM - $10MM range, so not huge by any means. What is a reasonable ask for compensation between acq fee and equity share?
Really depends on what kind of deals you're pulling and what work you're performing. Also, are you participating on a promoted GP side?
HF Capital Raiser Compensation (Originally Posted: 03/20/2013)
I am involved in a start up HF. My partners and I have been talking with an individual to act as an independent marketing consultant/capital raiser. Our arrangement would be that as this individual brings investors to us, we will give them a payout/finders fee. I was wondering if anyone could provide any insight on what capital raisers typically get paid? Is there a industry standard rate on finder fees? Thanks
they often get a cut of your 2 and 20. i.e., 20% of your 2 and 20% of your 20.
or you can pay them out of your own pocket via monthly retainer. i don't know of any higher-end outfits that charge under $10k a month.
spot on
but I've also seen where the fees are reduced after a handful of years - something to consider.
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