Finder's fee ($), what's market:
I've recently seen three versions:
(1) Lehman formula is the most typical. 5% of the first $1m, 4% of the second $1m, 3% of the third $1m, 2% of the fourth $1m, and 1% of everything above.
(2) A straight 1% is simple and uncontroversial (Lehman Light). For pure warm introductions.
(3) Sometimes 2% (the whole independent sponsor closing fee). In such cases, the finder actively sourced and negotiated the deal, teeing it up.
Factors that influence the size of the finder's fee:
• Was it just an intro or was everything teed up?
• Was it just a cold reference ("hey, here's a deal that might fit you") or was it a warm intro ("Sir, you absolutely need to meet this sponsor, the perfect operator of your company").
• Are you actively involved in vetting or closing the deal?
• Will you be involved at the board level or operationally?
