finder's fee business definition
The charge levied by a person or firm for putting together a deal. For example, a finder may receive a fee equal to 3% of the principal amount paid for a corporate acquisition.Case Study
In late 2002 the SEC filed a complaint alleging that Frank Walsh, a director of Tyco who served on the firm's compensation committee, recommended that Tyco acquire CIT. Following a meeting between the two firms' CEOs that had been arranged by Walsh, Tyco CEO Dennis Kozlowski proposed to pay Walsh a substantial finder's fee if the deal was consummated. Walsh subsequently voted in favor of the transaction, but did not disclose to other members of Tyco's board that he would receive a large fee if the transaction was consummated. Following the transaction, Kozlowski caused Tyco to pay Walsh a $20 million finder's fee consisting of $10 million in cash and $10 million as a contribution to the charity of Walsh's choosing. Walsh did not admit or deny the SEC allegations, but consented to a final judgment that permanently barred him from acting as an officer or director of a publicly held company. In addition, he was ordered to pay restitution of $20 million.
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