Frequently Asked Questions (FAQ)

If our organization were to engage your company, what are the estimated costs of acquiring another charity?

It's difficult to estimate the costs without having both parties engage in due diligence and valuation, and every M&A has its own specifics that make it difficult to provide a general model. However, there are transaction fees, and they do include a fee to Edward Charles Institute. Any other transaction fees are born by the investigating party (eg., third party valuations, other attorneys, accountants, etc). But, one of the nice things working with our firms, absent a nominal engagement fee for acquiring charities, the fee is only paid on a deal being penned.

When an organization is acquired, does the organization expect to continue to have prerogatives in operating the organization?

The marriage of two agencies can be a tricky proposition, and even in cases where there is complete assurance that ownership transfer includes complete relinquishment of authority for the acquired identity, it is still difficult to make any promises. However, as part of our process, we will introduce you and allow their Board and you to reveal any bias(es) towards ongoing management issues, as the relationship develops. This can be a very organic process.

Does Edward Charles Insitute expect any compensation of any kind if the acquisition is not consummated?

There is an initial engagement fee that we do require in order to start the M&A process; sometimes, we waive this fee which ranges from $3,500.00 to $5,000.00 on a case by case basis. This includes all of the work that we do at ECI, including market and industry research, as well as coordination of introductions and meetings. If the end result does not include any kind of acquisitions, there are no additional fees. However, if an acquisition does take place, there is expectation of compensation, additional to the initial engagement fee, to ECI for making the introduction.

Given that an acquisition or a merger does occur, what would be the expected amount of the compensation that Edward Charles Institute will receive?

We base our fee on a percentage of the value of the acquired charity. Until we learn of any shift in valuation, we are currently looking at a charge of 2-10% as a transaction cost. We service a wide range of acquisitions, and our model is built on a sliding scale, to ensure that smaller deals do not incur overly burdensome costs. Primarily, we're developing our reputation as an intermediary who can bridge relationships and bring unique assets to acquiring parties, where they otherwise would not recognize an opportunity.

To give you some context for what we're capable of providing, we recently closed a deal where we considered the value of the charity to be strictly in terms of real property which had an excess of $1,000,000 of equity; we placed no value on any other asset, not because there wasn't' value; it was just simple. Our fee was in the area of $30,000, a sum we felt was reasonable and both parties agreed to it. Keep in mind this fee was not agreed to in advance because the acquiring party had to look at financials before they would agree to anything. We understand and made all financials and information available.

That being said, another deal resulted in a fee of $20,000, and this fee was based upon the fact that one of the parties was only receiving an "approved curriculum" and the true value of the curriculum (agreed in good faith by parties) was $200,000, if the client had to hire a consultant from scratch to write this curriculum. Thus, we received 10% of the value.

The point to be taken is that there currently is no set model in terms of the structure of compensation. This is something to be negotiated in good faith. Our fees are commensurate with the value we are bringing to you in some economic sense that is in some way defensible based on reason and logic.