AboutDavid K. Staub Expertise I am a business and tax attorney and have spent more than 30 years assisting people in buying, selling, merging and spinning off businesses. I can answer questions on the mergers and acquisitions process and the related legal issues, in general. Topics can include structuring the transaction, negotiating the deal, conducting due diligence, and more. I can also guide people to find sources for answers to specific legal questions which cannot be answered in a forum of this nature.
Experience
Experience in the area I have been an Illinois business attorney for almost 30 years. I have an extensive practice in the mergers and acquisitions area and have been involved in the tax and legal issues on hundreds of business transactions.
Organizations Illinois State Bar Association;
Chicago Bar Association (former Chairman of the Corporation & Business Law Committee and former Chairman of the Mergers and Acquisitions Subcommittee; former Executive Committee member, Federal Tax Committee and Chairman of subcommittee on general tax issues); Glenkirk Foundation (Trustee; Vice-Chairman/Strategic Planning); Association for Corporate Growth, Chicago Chapter; Midwest Entrepreneur Forum; Midwest Association of Alpha Delta Phi - President
Publications Commerce Magazine; YLS Journal; ISBA Section of Taxation Newsletter
Education/Credentials Harvard Law School, J.D., 1977; University of Illinois, B.S. in Accounting, with highest honors, 1974
Disclaimer Responses are intended to be informational only. No response is intended to constitute legal advice or create an attorney-client relationship. Online advice is not a substitute for consultation with an attorney.
I am brooking some international licensing and partnering for a friend's company. He will give a percent of business shares for the business I bring in for him. Whenever they have fee and milestone payment happened and royalty payment I will get a percent of them as long as the licensing and partnering active.
My role in the transition is identify business, make connection and coordinating and assisting on difficulties between the parties.
My friend does not pay me anything in front. I agreed to invest my time and effort.
My questions are:
What percentage is fare for me to ask for the future business?
Should I ask other party for a percentage on other party I bring to my friend?
What kind legal contract I need to have with my friend and other party.
Please advise.
Thank you very much for your help.
JZ
Answer The question of what is "fair" is very subjective. It depends on the amount of effort you expend, the size of the transactions, the profit margin that your friend has, and many other factors. I have seen instances that range from 1% to 25%, but businesses at the extremes of the range are entirely different from each other.
Generally, you should expect to get paid by only one party. There are situations where both parties pay a fee to the same person (some auction houses charge a fee to both the seller and the buyer, for example), but it is fairly uncommon in the situation you describe.
The contract should spell out all the key terms: what the percentage is, what revenues are included in the formula, when payment to you is due, how is the contract terminated, etc... Particularly important in a contract for the type of services you describe is the issue of how long the payments continue. If you have brought in business, does your fee apply to every dollar your friend's business ever receives from that business partner? If your agreement is terminated, do you continue to get payments on future business that you already brought in? If your agreement is terminated while a deal that you initiated is already in negotiation but has not been finalized, do you get full compensation, partial compensation or nothing? These contracts can be very tricky to draft because you need to try to plan for a wide range of situations before you really have a good idea of what is going to happen.
