In a deal analysis, which reflects the rule-of-thumb acquisition fee as a percentage of the purchase price?

In a deal analysis, which reflects the rule-of-thumb acquisition fee as a percentage of the purchase price?

• A. 0.5%
• B. 1%
• C. 2%
• D. 5%

Answer: (B)

Acquisition fees are typically a one-time sponsor fee paid at close to compensate for sourcing and closing the deal. The standard rule-of-thumb is one percent of the purchase price, so the fee scales with deal size and keeps sponsor economics aligned with the asset’s value. This level is widely used because it fairly compensates effort without overly inflating project costs or distorting returns. A fee of half a percent underestimates the sponsor’s work, while a two percent or five percent fee would be unusually high and could materially distort returns or raise investor concerns, even though occasional deviations occur in negotiated structures.

Acquisition fees are typically a one-time sponsor fee paid at close to compensate for sourcing and closing the deal. The standard rule-of-thumb is one percent of the purchase price, so the fee scales with deal size and keeps sponsor economics aligned with the asset’s value. This level is widely used because it fairly compensates effort without overly inflating project costs or distorting returns. A fee of half a percent underestimates the sponsor’s work, while a two percent or five percent fee would be unusually high and could materially distort returns or raise investor concerns, even though occasional deviations occur in negotiated structures.