Legal Definitions - finder's fee

A finder's fee is a payment, often a commission, made to an individual or entity for successfully identifying, introducing, or facilitating a business opportunity or transaction between two or more parties. Essentially, it compensates someone for bringing together interested parties who might not have connected or completed the deal without that person's involvement. The specific terms and amount of a finder's fee are typically established through an agreement between the finder and the party responsible for the payment, which could be the buyer, seller, or both, depending on the nature of the transaction.

• Connecting a Boutique Winery to a Distributor

  Imagine a consultant who specializes in the beverage industry. This consultant knows a small, high-quality boutique winery struggling to expand its market reach and also knows a large regional distributor actively seeking unique, premium products to add to its portfolio. The consultant introduces the winery owner to the distributor's purchasing manager. After successful negotiations, the distributor agrees to carry the winery's products, significantly increasing the winery's sales. For making this crucial connection, the winery pays the consultant a pre-agreed finder's fee, which is a percentage of the initial sales generated through the new distribution channel. This illustrates a finder's fee because the consultant acted as the intermediary, bringing together two parties for a business transaction that likely wouldn't have happened as efficiently, or at all, without their specific knowledge and introduction.

• Sourcing a Specialized Manufacturing Component

  Consider a company that manufactures high-tech medical devices. They need a very specific, custom-made microchip that is difficult to source and requires a manufacturer with highly specialized capabilities. A procurement specialist, aware of this need, remembers a small, innovative fabrication plant known for its bespoke microchip production. The specialist introduces the medical device company's purchasing department to the fabrication plant's sales team. This introduction leads to a successful contract for the custom microchips. The fabrication plant, grateful for the new significant client, pays the procurement specialist a finder's fee based on the value of the initial order. This demonstrates a finder's fee as the specialist connected a buyer with a highly specific need to a supplier capable of meeting that need, facilitating a complex supply chain transaction.

• Facilitating a Sponsorship Deal for a Charity Event

  A community organizer is planning a major annual charity gala but is struggling to secure a significant corporate sponsor. The organizer mentions this challenge to a friend who works in public relations. The friend has a contact at a large local corporation looking for opportunities to enhance its community involvement and public image. The friend arranges a meeting between the charity event organizer and the corporation's marketing director. This meeting results in the corporation agreeing to be the primary sponsor for the gala. In appreciation for making this valuable connection, the charity organization pays the friend a modest finder's fee from the sponsorship funds. This example shows a finder's fee being paid for connecting a non-profit organization with a corporate sponsor, enabling a beneficial partnership that might not have materialized without the friend's direct introduction.