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Private Placement Fees

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Jun 15, 2005 6:16 pm

I am a registered rep and work with small businesses to help them find private placements.  I am in the midst of negotiating a potential contract with a broker/dealer firm and need to know current market trends on two things:

What is an appropriate finder's fee pay structure (e.g., Lehman's Formula, 10% flat, etc.)?

How much does the broker/dealer firm get for carrying my licencse (e.g. 10%, 15%)?

Thanks for the input!

Jun 15, 2005 6:26 pm

Are you talking placements as in an HR/recruiting type of role?

Jun 15, 2005 6:31 pm

No, I’m talking about raising private money for companies in the ballpark of a few million dollars.

Jun 16, 2005 1:41 pm

I don’t know what the fee would be but you had better be very
careful.  If you are taking a fee to place private money in a
private company - you are liable if there is anything wrong at the

You had better have a team of CPAs review the books and speak with the
bankers and clients and you had BETTER make sure the buyer understands
the risks and signs off on legal documents.

This isn’t an area for a rookie to think he’s going to make $100k without a problem. 

If you are working with a BD and doing this, my guess is they don’t
understand what you are doing or they would fire you instantly - their
liability is far beyond E&O insurance.  You aren’t acting as a Registered Rep you are acting as a banker - very different thing.