Richard Wilson: comparing a sponsor contribution with upfront fees

Richard used a hypothetical acquisition to compare a sponsor's stated cash contribution with fees received at closing.

The contribution was one side of the example

He first described a sponsor putting money into a deal. He then introduced acquisition fees that could exceed that contribution. The comparison challenged a claim based only on the amount invested.

He acknowledged deal costs

Richard added that the sponsor probably had costs. That qualification belongs with the arithmetic: gross fees and retained profit are different quantities.

In Richard C. Wilson's words

"You probably had deal costs, right, to be fair." (Richard C. Wilson, recorded Rainmaker Series module)

How to use this

Place the stated contribution beside the fees in a summary of the example.
Account for costs before equating gross fees with profit.

Questions and answers

Why did Richard bring fees into the example?

To examine the sponsor's net exposure alongside the stated investment.