Q:

What is the standard finder's fee?

A:

There is no standard finder's fee because it is usually based on a percentage of the business deal reached. It is best to agree on a percentage and put it in writing before the deal goes through. As there are few rules governing this practice, businesses have no obligation to pay a finder's fee if it is not worked out prior to deal.

The finder's fee depends largely on the size of the business deal reached. If large enough, the percentage for the finder's fee may be one percent or even less. Although it doesn't seem like much, this can result in quite a considerable sum.

If a professional is involved, then the final payment may be called a "referral" instead of a finder's fee. If no agreement is made before setting up two business organizations, the individual could simply receive verbal acknowledgement. The relationship between an intermediary and a business also plays a part in awarding a finder's fee. If the person is a long-term friend of the organization, then the company may be more willing to compensate the person. It is often up to the intermediary to ask for a finder's fee, as the two companies are likely focused on reaching a deal and may overlook the role of the individual.

Sources:

  1. businessweek.com

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