Middle Market Deals and how to buy, sell and raise capital from $5 to $500 million

To people just entering this universe, I am certain that the transparency of this pricing plan will be a god-send... I remember when my first venture ( I co-founded a small software company back when it wasn't cool ) started looking for a buyer there was a lot of apprehension. Luckily, our principle was a good balance of savvy and pluck.

Of course, for those entrepreneurs who fancy themselves as mavericks, transparency won't really be a selly point... as the abstruse nature of a deal left room in their mind to think that they'd pulled one over on the pro.

Thankfully, mavericks are often surrounded by calmer minds... so I think the transparency will still be a plus.

My only question is this: as there's really no vibrant marketplace for firms such as yours to hawk your wares, do you think that this differentiator will really be key in the discovery phase? I suspect that it will, most likely, be a deciding factor during negotiating... when parties that were chosen for other, more visible qualities (mostly connections) must square-off for business.

Anyway... just a thought or two.

Good on Thorpe Capital for being progressive!

2 percent instead of 15 percent?

That's a no-brainer.

Can anyone give some light as to seller's advisors requesting a success fee from prospective buyers? I am seeing 3% of transaction value requested of the buyer to pay to the investment bank representing the seller "for their involvement", which sounds non-standard. Shouldn't the seller be responsible for paying success fees, with the advisor sending a letter of thanks to the buyer instead?

You are correct that generally the seller pays the advisor's fees. There are some typical exceptions to this pattern. For instance, private equity firms often agree to pay advisors for bringing them introductions to sellers where the advisor is not engaged formally by the seller. As you imply, however, it would not be typical for both the buyer and the seller to pay the advisor.

Thank you!