Adding 1.5% for Acq personnel to deal costs for sourcing deal.
We were recently presented a deal from a sponsor as a co-gp where they would do the work and we would put up/raise equity and they were adding a 1.5% of pp fee to be paid to their acquisitions guy who had sourced the deal (fully off market) along with an Acq fee of 1.5% of pp to the principals which is not a huge amount as the purchase price is low $4M (but total deal costs are $40M).

Apparently that's how their Acq guy makes most of his money and they're presenting as just being the cost of the deal. I don't see a problem with it as it's an awesome deal but seeing if anyone has seen this before.
[{"id": "im6176z", "text": "10% of total deal costs seems very high. I would expect total Acquisition Fees to generally be roughly 1.5%-3.5% of Purchase Price (not total cost). Would need more context on the size of the deal, as I\u2019m typically looking at deals $5mm to $50mm.", "replies": [{"id": "im620qq", "text": "Sorry didn't explain that well, just updated post. Land is $4M, total deal costs are 40M. It'd be 1.5% Acq fee 1.5% to Acq personnel.", "replies": [{"id": "im63ekh", "text": "I don\u2019t think this is an unreasonable total cost with the additional context, though seems odd calling it an acquisition fee and it definitely should not all be paid at closing. I would probably structure/negotiate it such that the fee is paid upon completion of the project, or maybe allow the fee on just the purchase price at first and then the remainder at completion of project. Seems very silly to pay the co-GP $1.2mm at closing (based on total costs) of a $4mm acquisition, before they complete any of the development.", "replies": [{"id": "im8w0fn", "text": "Isn't that what they said in OP - \"1.5% of pp\" where pp means purchase price? So its $60k to acquisitions dude and $60k to the honchos = $120k, nobody is walking with $1.2MM at land purchase closing.", "replies": [{"id": "im9akep", "text": "He updated the post. It used to be unclear and read that it was based on total deal costs.", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "im6l0vi", "text": "I\u2019m a little confused. Are the total acq fees 3%? On a $4 million deal that would be $120k. What is the $40k for?", "replies": [{"id": "im6lrq0", "text": "Yes. 1.5 to their lead Acq guy who sourced the deal and 1.5 to the principals of the firm.", "replies": [{"id": "im6ng5w", "text": "3% acq fee is typical.  What is the $40k for?", "replies": [{"id": "im765ql", "text": "There's no 40k..", "replies": [{"id": "im91oel", "text": "Okay, I guess I'm confused what you meant by this.\n\n&gt; (but total deal costs are $40M).\n\nCircling back to your original question, a total acquisition fee of 3% is common for a deal this size. How you divide it up is completely up to negotiation.", "replies": [{"id": "ima0doy", "text": "Got it thanks!", "replies": [], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "im7ck4v", "text": "Bro if ur raising money as a co gp u should get the percentage that u raised of total eq needed. So if u raised 20% of eq needed u should get 20% of acq now the yearly breakdown percentage would be different the its that simple. I got opportunities with people that manage thousands of units if your interested in a real structure that makes sense.\n\nUr coming in as a co gp right?", "replies": [{"id": "im8sorx", "text": "I typically see 4 percent of land cost for off market deals as a normal brokerage fee. That is market, especially if you are in a competitive area. If it was listed you'd be paying 6.", "replies": [], "depth": 2}], "depth": 1}, {"id": "im8w9yb", "text": "Seems odd that that payment wouldn\u2019t be going to you but ultimately if it\u2019s \u2018his deal\u2019, he can do whatever he wants. The numbers aren\u2019t high, but the structure is interesting. What are you guys planning on doing with the debt?", "replies": [{"id": "ima0fll", "text": "Traditional Acq loan most likely", "replies": [], "depth": 2}], "depth": 1}, {"id": "im8y002", "text": "Yes, as a broker it's fairly common to run into a mid-career (VPish) acquisitions guy who mostly eats what he kills. Small salary/draw (small is a relative term), it's kind of like having a broker in-house. Has nothing to do with the development project, he's just providing your dev team with a ready canvas. So he gets paid when purchase closes and moves on to the next canvas.", "replies": [{"id": "ima0hmg", "text": "But is it common to be added as a project cost?", "replies": [], "depth": 2}], "depth": 1}]