River Guide fees - what's the going rate?

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December 04, 2023

by a searcher from INSEAD in Greater London, UK

Hi everyone,

Has anyone used a River Guide to gain warm introductions to business owners? If so, what is the agreed fee?

Would be very helpful to know how many of you used this method of search and what it cost...

Thanks,
Eyal

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commentor profile
Reply by a searcher
from Duke University in Savannah, GA, USA
I signed a finder's fee agreement with someone who provided warm introductions (and hung around the hoop continuing to stay involved) to doctors looking to sell their practice. The fee was only paid if we closed on the deal and was structured as a percentage ladder of the applicable amount, which was defined as new incremental cash in the form of common equity used on closing day to acquire the company. So it wasn't off of EV and thus didn't include rollover equity, debt financing, preferred equity, holdbacks, earnouts, or seller financing. It was 2.5% of the first $5m of applicable amount, 2.0% of the next $2.5m, and 1.0% above that. The fee was halved if the seller was represented by a sell-side advisor and would be the lower of $5k or 1.5% of the applicable amount if the finder's value-adding involvement ended after the warm intro or didn't exceed three hours. It only applied to introductions to sellers we didn't know and only if we closed within 18 months following the initial introduction.
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Reply by a searcher
from INSEAD in Greater London, UK
Am I being overly-frugal with future equity???
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