Finder’s Fee
What It Means
A Finder’s Fee is a commission paid to an intermediary for facilitating a transaction. Finder’s Fees are an incentive reward for bringing the two parties in the transaction together, and they can be paid for an act as simple as making an introduction. Finder’s Fee structures can vary widely, but the size of the fee is often based on the relative value of an associated transaction, such as the transaction value of an Acquisition.
Why It’s Important
Finder’s Fees are very common in the realm of finance and Acquisitions where Buyers are looking for great companies and Sellers are looking for the right Buyers. Finder’s Fees aren’t inherently bad, as they can be a strong motivator for advisors to do everything in their power to make a deal happen. Good advisors will be transparent about whether they have a financial interest in a certain relationship. Sellers shouldn’t be afraid to ask them about their incentives and whether they expect to receive any Finder’s Fees from a transaction.