Modeling a deal fee for independent sponsors

Member resources:

Frequent asked questions:

What is Searchfunder.com?

Searchfunder.com is an online community of searchers, investors, lenders, brokers and other professionals. Over 80% of those involved in searchfunds maintain a Searchfunder account to help them network, hire, and mentor others.

What are the benefits of membership?

In addition to accessing the most active online network of business buyers, Searchfunder licenses research that is simply not cost effective for individuals. Access over 15,000 industry reports and 50,000 transaction financials. You also get monthly credits for contact information for your company sourcing campaign with the option to purchase more at drastically discounted rates. Searchfunder has pre-purchased access from these data providers in order to empower individual buyers and to help searchers level the playing field versus private equity.

Do you have deals?

While we are primarily a buy-side network, we do have hundreds of brokers that regularly post deals to the community.

Can I find an internship on Searchfunder?

Absolutely! We have the industry's largest intern job board. If you are considering a search, the first step is to help another business buyer so you can hit the ground running.

What does it cost?

Searchfunder is a subscription service. We offer flexible monthly, annual and lifetime memberships.

Monthly

$79 / month

Annual

$19 / month

Lifetime

$432 / once

Those who maintain an account with us for over 4 continuous years are permanently added to the community without the need for a membership.

Do I need an MBA to join?

While a large number of our members come from dedicated programs at Harvard Business School, Stanford GSB, Chicago Booth, and other top programs, searching is no longer reserved for the elite. With the current abundance of dry powder in private equity, and an increasing number of business owners reaching retirement age, good deals rarely go unfunded.

Post a question, deal, job, etc...

Make a post...

Complete registration to post.

by a searcher from Columbia University - Columbia Business School
in New York, NY, USA

4yrs ago

Modeling a deal fee for independent sponsors

In an independent sponsor transaction, how is a rolled deal fee modeled in sources and uses?

Does it come out of the capital provider’s (say an SBIC) equity or total equity (including a roll).

I am trying to understand if this would be dilutive to a seller rollover.

Thanks!

1 Like

272 Views

reply by a searcher 4yrs ago
from University of California, Santa Barbara in Los Angeles, CA, USA

Total equity usually; key question is also where the rolled equity sits in the preference stack; if pari with the money than the fee is usually taxable income to sponsor; if behind pref, then equity can be not taxable but obviously that rolled equity is more at risk

reply by a professional 1yr ago
from Dartmouth College in Los Angeles, CA, USA

Agree with Dan on the total equity, it does not typically reduce equity from the capital provider. Priority between the pref, the sponsor rolled deal fee and the seller rollover is what is typically negotiated and m0re variable. The tax point is key since if you want to avoid income tax on the rolled fee you have to structure this from the beginning of the transaction