I'm a self-funded searcher targeting businesses with $400K-$1M EBITDA, or roughly $1M-$4M transaction value. I've talked to M&A advisory firms that will share deals with me matching my criteria. At my size, they will be "passed" deals from their larger clients. For closed deals, there is a success fee on a Lehman scale, 5% on the first $1M, 4% on the next million and so on, with a $150k minimum. The first deal presented to me has a $2.6M price tag, which means it would trigger the minimum fee. At $3M transaction value this seems palatable, but at $2.6M or less it seems like a lot...
- Thoughts - is it worth paying these success fees if it helps to find more/better/quicker deals?
- Is there a threshold deal size you don't think the fee is worth it?
- Has anyone had luck financing these fees...is that even possible?