👋Unpopular opinion about sponsor acquisition fees

[Justin Goodin]

 👇Unpopular opinion about sponsor acquisition fees

They are 100% necessary.

If you didn't know, sometimes sponsors charge what is known as an 'acquisition fee' when they buy a deal.

Typically 1-3% of the purchase price of the asset.

Sometimes sponsors spend months (or years) researching and underwriting deal after deal to no avail. The acquisition fee is what keeps the lights on, so to speak.

And helps afford all that time & effort during/between deals.

✅ If you don't agree with the sponsor acquisition fee, you must first understand that sponsors do not share in the profits (most of the time) until the sale, because of a preferred return.

Fees sometimes get a negative connotation...

→ You pay fees for your 401K.
→ You pay fees when you buy a car.
→ You pay fees when you buy a house.

Would you be willing to pay a fee for an awesome investment opportunity?

Sponsors should clearly show any/all fees in our investment summary.

Learning about and understanding the fee structure is one more checkbox checked toward being an informed investor.