Compensation for helping someone in their search process

February 19, 2023

by a professional from Georgetown University in New York, NY, USA

Folks, how do you think about compensation when you're consulting someone in their search process? Not as a broker but more as a co-searcher of sorts, helping with search, diligence, etc.? A close friend has asked to help them with their search process. They already have the capital and are looking for help with the search and acquisition process.

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Reply by a searcher
from Duke University in Alpharetta, GA, USA

Depends if I'm asking or their offering. Strategic advice reviewing a deal or market is gratis, provided we're talking about less than a few hours of actual effort on my part. I'd ask for a (reduced) consulting rate for anything beyond that, maybe 70% of what I'd charge a longer term client or 50% of what I'd bill a short consultation at. The logic being if you want serious financial modeling, pitch development, or commercial due diligence - you're cutting into my time for family / other clients and generating economic value from it, so it's reasonable to ask for compensation.

Reply by an investor
from Columbia University in Larchmont, NY, USA

Will this be a one off deal to diligence or a recurring request? Is your expertise business DD? These acquisitions tend to be small and can't withstand high DD costs (even if the deal is completed). If it's a friend, and non-recurring, I'd consider doing it for a small cash payment (on a contingent basis).

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