Small Business

Don't Expect a Fee for Making an Introduction


Bringing together people who later form a successful venture does not entitle you to a reward or compensation

I'm an independent record producer. About 30 years ago, I introduced a close friend to a recording artist, and we all became friends and produced a song together. We lost touch with the artist, who is now a millionaire, but recently my friend contacted him, and they plan to form a partnership. Since I introduced them initially, do I deserve any monetary compensation from their joint venture?

—R.B., Manasquan, N.J.

The compensation you're asking about might be termed a "finder's fee," in which an individual gets a flat fee or a percentage of a business deal that he or she helped arrange, typically by making an introduction. "A finder's fee is associated with the performance of some type of service. The finder acts as an agent and thus is entitled to a fee for performance," says Robert Chell, a longtime business consultant in Indian Wells, Calif.

However, in your case, that introduction took place 30 years ago, and then the parties lost touch. After many years passed, your friend took it upon himself to reestablish contact with the (apparently now-successful) recording artist and form a new partnership.

Since you didn't make the introduction this time—the parties already knew each other, and you weren't asked to be a conduit—it is pretty tough to make the case that you deserve compensation from their joint venture, Chell says: "If you'd done something specific this time—maybe. But in this case, maybe not."

Other experts agreed. "If the business relationship began and ended with the production of the song way back in 1979, then an expectation of some reward, monetary or otherwise, is not in order," says Sheldon Kopin, president of JBS Associates, a management consulting firm in Cincinnati.

Goodness Is Its Own Reward

"Thirty years is a long time," notes Dean A. Shepherd, a business professor at the Kelley School of Business at Indiana University. Instead of asking for compensation from your friends, think about whether you have something to give, he suggests. Perhaps you could work with them, either as a partner or a consultant. Or maybe you could consider investing in their new venture.

Entrepreneurship involves a great deal of networking and often calls for introductions, informal and otherwise, that are done without monetary reward. "Formal compensation is rarely a part of the networking process," Chell says. The same is true in academic circles, Shepherd says.

Shepherd says he considers the time he spends making connections an investment in the future: "You don't know what opportunities will arise from generosity. Even if people don't remember what you've done, you feel good about yourself—and so you should." Being kind is also an important part of being a member of your community and of larger society, he says. "To always look for a quid pro quo is a short-run strategy that can eat away at you and is not likely to be highly beneficial in the long run."

Karen E. Klein is a Los Angeles-based writer who covers entrepreneurship and small-business issues.

Later, Baby
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