If you own a small company and are looking for investors to invest in your company, you may want to consider hiring an experienced placement agent to help secure investors. A placement agent will usually have relationships with institutional investors, such as pension or hedge funds, and can serve as a broker to try to convince these investors to invest in your company.

Like any agent for hire, the placement agent must be motivated by financial compensation. A key part of any placement agency agreement, therefore, is a provision discussing the placement agent’s fees and compensation. This provision is negotiable, of course, but as a guideline, it may be helpful for you to review other placement agency agreements to determine a fair rate. In a typical agreement, in consideration of the services rendered by the Placement Agent in connection with the Placement, the Placement Agent is paid a fee of 5.00% of the funds raised in the placement. It is also important to include a provision in the event that the offering originally secured is terminated. In this case, the Placement Agent should only be entitled to fees to the extent securities of the Company are placed by the Placement Agent.

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