How Not to Get Ripped Off by a Placement Agent

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May 19, 2026

by an intermediary in Austin, TX, USA

Most sponsors don't know they're getting ripped off by their placement agent until the deal is over. The retainer is gone. The raise stalled. And the banker has already moved on. Here's what to ask before you sign anything: → Who actually works your deal — not who pitches it → Show me the investor list (names, not categories) → What does your tail clause say, exactly → Have you ever told a client their deal wasn't ready? And during the engagement: → Weekly updates with investor names, not just "we contacted 40 LPs" → Show me what you're sending them → Are these introductions warm, or broadcast? Two red flags that should end the conversation fast: → They've never passed on a mandate → They can't name the last three deals they closed in your sector Your deal goes to market once. The agent who takes your retainer on Tuesday and mass-emails your deck on Thursday isn't protecting that. Ask the hard questions before you sign.
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Reply by a searcher
from University of Central Missouri in Baltimore, MD, USA
Thank you for these tips. Are there market rates and structures for placements agents? Retainers, success fees, etc.
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Reply by an intermediary
in Austin, TX, USA
Market rates for success fees are usually 5-7% on equity, 3% on junior debt and 2% on senior debt. Retainers fall into two categories: upfront all at once $25-50k (I don't recommend this) or $5-10k monthly (we charge $5k). Time: 6-12 month terms with a 12 month tail period. Other services to get as part of the offering: deal screening (single most important thing before reaching out to investors, pitch coaching, and deal due diligence from an investor and compliance viewpoint). If people are interested, I can put together a primer on all this.
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