Insights on Deal Incentives for Intermediaries

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by a searcher from University of Virginia-Darden - Darden School of Business
in Washington, DC, USA

1yr ago

Insights on Deal Incentives for Intermediaries

I'm exploring the best ways to incentivize intermediaries, such as river guides and other parties who can naturally generate proprietary deals.

What are the typical incentives offered in these scenarios? For instance, I'm considering offering 0.5% of the deal value and an opportunity to invest in the deal. Would this be considered a competitive and attractive offering? Additionally, are there other structures or incentives that have proven effective?

Any insights or examples would be greatly appreciated!

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reply by a searcher 1yr ago
from Dartmouth College in Boston, MA, USA

Unfortunately not the most concrete answer, but it sounds like the answer is - "it depends" (or it is all over the place). Lehman (although not always referred by that name), seems to have been the standard for a long time, and is still a solid default. Sounds like it has somewhat declined in favor though, as it incentivizes smaller deals (diminishing finders incentive as the deal gets larger). At the end of the day, cash is king, and it seems the more professional a dealer/broker is, the more they will dictate initial terms, and the more informal someone is, the more it can be discussed between the parties of what would seem like it makes it worth their while. It's all part of the ultimate purchase price to you as the buyer, so that's a helpful way to think about what fee you are willing to pay.

reply by a searcher 1yr ago
from University of Virginia in Washington, DC, USA

Thank you, Nathan for the additional clarification. I spoke to another searcher that mentioned using a flat % of the deal and that seems to be yielding good results.