Deal fee

Definition

A cash fee the sponsor charges the deal at closing for finding it.

Why It Matters

This is how an unpaid searcher gets paid for the work that reached a signing, and it comes out of the money raised to buy the business, so every dollar of it is a dollar not sitting in the company on day one. Investors read its size as a statement about the searcher: modest and disclosed early reads as alignment, large and produced late reads as a second negotiation. Lenders read it as a use of funds and want it on the closing statement, so a fee agreed by handshake and produced at the table can hold up an approval.

In numbers: A 2% deal fee on a $6M purchase is $120,000 paid at closing, funded out of the same loan and equity as the purchase price itself.