TLDR: how do you go about getting a cut of a deal when you introduce two parties, but are otherwise not involved in the deal itself?
In my networking over the past few years, I've been connected to a bunch of smaller, newer entrepreneurial developers. My question is, without being an actual broker or IS rep for a particular property/company, is there a way to get a cut of a deal if I introduce two developers/someone selling land/a building? For example: Developer A wants to expand their industrial platform into a Texas market which is home to Developer B. Developer B wants to expand into industrial and doesn't have that experience, but knows the overall Texas market extremely well. Me, knowing this, could put them in touch in order to pursue deals together. For arguments sake, let's say they wouldn't meet/partner on a deal without my introduction.
This might run parallels to an acquisition fee, but again I wouldn't foresee myself working on the actual deal. I liken this to more of a "finders fee". Does anyone have experience with a scenario like this and how did you broach the topic with your contact(s). If getting a broker license is a prerequisite and actual representation is required, this might be a short thread. However, I don't necessarily have interest in becoming a pure broker or work in IS - I would consider this more of a side hustle to make a quick connection and hopefully get some equity in the deal or an upfront fee while they work through it all.
So, yeah people do attempt to do this all the time, and some get big checks as a result. Not easy, as you need to convince on side of the house that you should be paid for an introduction. If you providing legit services, then it could be billed as consulting, but I would expect you to really negotiate the deal, structure it, or do something that provides substantial value to one or both sides. If this is in the transaction of real property (which your example doesn't really lay out), then most states would say this is activity that requires an RE license (since pretty much all states allow for referral fees from all other states, geo boundary is rarely an issue, especially if a lic. broker exist in the state of the deal can pay you) so you want to pay attention to state law (not bad idea to have an RE lic to do this in general).
All that said, in a hyper-connected world with Linkedin and all, getting paid to introduce two firms/people is very old school and will put people off. If I were in the situation of Dev A and you offered to introduce to Dev B but only for a fee, I would politely decline (my firm wouldn't go for that in most situations). Everyone hates third parties trying to collect fees who are really working in them. If you knew the TX market and I needed help evaluating partners, then we could talk about a consulting engagement if I thought I needed or wanted the help.
Personally, I would make these connections without ask/fee expectations (I was in a consulting role before joining the devco I work for now), but that is because I am not trying to be a broker. If it was a matter of just a phone/email introduction, I would do those freely and did so all the time. I got the benefit of goodwill for my own career and consulting services. I see it as network building. I don't begrudge people looking to make money this way, but don't be surprised when people stop answering your phone calls.
Yep, great points. At the end of the day I don't want to be "that guy". The long-term relationships are more important to me. Seems like if I went the broker route and actually did work on a specific deal that's a different story. The goodwill might come back tenfold.
If you don't get a fee you may be able to participate in the deal in an advantageous position, potentially as part of the GP, which I don't believe would be too unusual and is less offensive than charging a fee. You could frame it in a way that you really respect both firms and would like to be a part of a deal which is a totally reasonable request given you are making the intro.
Yeah putting in capital and asking for a pari-passu of promoted interested might be your best bet. If the GP is $1MM and you want 1% its only $10k and you can get a return way above market by getting that share of 1% of the promote.
This is basically brokerage, we do this all the time.
Don’t ask for a fee.
See if you can invest and contribute cash to the deal. I’m sure they’d be happy to let you invest though.
Connecting people should be done because it’s the right thing to do if you know it will mutually benefit both of them:
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