Rolling Broken Deal Fees

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by a searcher from Indiana University, Bloomington/Indianapolis - Kelley School of Business
in New York, NY, USA

1yr ago

Rolling Broken Deal Fees

I have had a broken deal and am still working on acquiring a business. Legal/accounting have agreed to roll a portion of their fees into the next deal. My question is, how have others handled rolling fees into another deal with their capital partners?

Did you receive pushback from rolled fees from investors? How did you argue against that? Did investors ultimately accept the rolled fees in the Sources & Uses on your next/closed deal or did you end up having to come out of pocket anyway?

Thanks in advance.

___

Updating this post given initial comments - I'm a self-funded searcher. Investors would be investing on a deal by deal basis, so they are not necessarily the same from one deal to another. In this case, the two acquisitions would be in different industries, so it's likely a very different set of investors. Regarding Spencer's comment on the investor groups being different and a second set of investors not wanting to pay fees from the first deal - that is exactly why I posted this question and am hoping for feedback on how others handled this dynamic.

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reply by a searcher 1yr ago
from The University of Chicago in Stamford, CT, USA

One point to be wary of, your investors may not be the same pool of folks.

If investors in dead deal A are not interested in new deal B, or you bring in new investors into new deal B, it may come across as unjust to make the replacement/new investors pay.

reply by a searcher 1yr ago
from Norwich University in Maryland, USA

This can depend on how you are structured. Are your investors in for any deal or only in ones they like (like Spencer says)? Easier with the former.