Questions on closing a deal with senior care business

[Xavier Cabo]

Good morning BP community, 

I am trying to complete a deal with a senior care business looking to expand their operations. The business has several properties in the state and the owners want to add 3 locations per year over the next few years.They usually own 20% of the properties and the remaining 80% is owned by an investor. They guarantee a 20% annual return and have triple net arrangements. I have identified an investor who would be very interested in this deal. My dilemma is two fold though:

1. Can I get in this deal to close the first property beyond collecting a finders fee? I'd want a small equity percentage since I am the one brokering that deal in the first place, I am putting together the deal proposal, and I also would be actively involved in finding the property. If this is an acceptable practice, what would be a reasonable percentage to ask?
2. If this first deal is successful, how can I ensure that the business and my investor don't skip me on the next deals? Can I have them sign an exclusivity agreement that requires them to include me on future projects?

Thanks in advance for your input.

[William Yeh]

Hi Xavier,

My groups is currently serving as lead investor and developer on a ground up 80-100 bed senior housing deal in the Bay Area, CA.

The type of deal you can negotiate depends on the value you're bringing to the deal. I've seem some deal brokers who've made a small finders fee for connecting an investor to a project sponsor. I've also seen deal makers that 1) find investors, 2) find land and 3) entitle land and get a healthy equity percentage in a deal without contributing any of their own money. It all depends on the relationship you have with the senior living operator and how you negotiate with them based on the value you're bringing to the deal.

If you're finding the property, are you acting as the buyer's broker (assuming you have a license)? That's one way to be compensated for your efforts. If you're bringing investor money to the table, that's yet another service you're providing critical to the deal.

Whether you can have them sign an exclusivity agreement again comes down to a business negotiation. As someone sitting on the other side of the table, I can't image ever signing an exclusivity agreement locking my group in to working with one deal broker. What's far more likely is an a-la-carte arrangement where you'll be able to command some level of equity/compensation for those deals that this senior living operator joins you on.

Another idea is shopping your services with other senior living operators. Bidding and creating competition for your services is always the most powerful force in any business dealing.