Referral Model

As a small part of our business we are often in the position to refer buys and sellers to each other for mutual benefit of all three parties with one-off point-in-time value creation projects.

Sometimes this also extends to ongoing value creation or actual asset creation (eg new products or new companies) by spinning out assets such as custom technology from one company and selling it to multiple companies in a standard form.

Hence there are three primary models (all are revenue share and/or equity) for us to refer you to others –

  • Seller Model
  • Buyer Model
  • Asset Creation Model (also know as the spinout or startup model).

If you receive such a referral from us and chose to accept it, you agree up front there is potential value created for all parties, and there is no conflict of interest, and these are our standard terms for new relationships.

Seller Model

In the Seller Model, you are selling products or services typically in technology or operations. We refer you a material client or partner opportunity. You pay us success fees as percentage of revenue.

  • Consulting and support services fees – 5% upfront (initial contiguous engagement not more than 24 months) and 3% ongoing (eg maintenance or ad hoc services later). Includes on-premise and remote services provision and technology or other physical or virtual items provided as a service or rental.
  • Subscription services and recurring licence fees (e.g SaaS) – as per consulting and support services. Note this is applied to the vendors revenue so if they are the primary producer that it applies to 100% of the client invoice if they are a reseller then it only applies to their commission on the sale.
  • Upfront Licence fees – 15% upfront (paid as received not less than 60 days in arrears) no ongoing (eg software on premise or on a dedicated cloud server or other intellectual property.

Buyer Model

In the Buyer Model, you conduct a business and have or plan to buy services or products and we save you time and money and probably improve your outcomes by referring a provider insightfully. You pay us success fees in the form of savings and upside.

Savings shared equally. By arrangement, typically 50% of the industry consulting rate for an equivalent services contract engagement (or standard industry finders fee) to find and implement said seller. This is best addressed in an arms-length practical manner by getting an indicative email quote from one or two third parties for the same work we did more efficiently.

For example a consultant is asked to find, evaluate and implement a very specific industry segment software product for a business and the quote is 60 days full-time effort for finding and evaluating and 120 days for implementation with two resources completed with in two and a half months. Our referral effectively saves most of the 60 days except for say 5 days for negotiations and contract finalisation so the fee would be 50% of the remaining 55 days at our normal rates. Additional value creation may be captured and hence shared by agreement.

Asset Creation Model

Where our referrals enable the creation of new assets (eg spinning technology out of a business into a product that can be sold to other businesses) our fee is 5% equity in the new vehicle and a option to acquire 5% more at the same price as other founders OR non-equity revenue share as per the Sellers Model above.

Standard Principles for All Models

  • All payments must be electronic and direct to bank.
  • Taxes are excluded in all calculations.
  • You get value then we get value.
    • Sellers Model Example – All payments are ‘as received’ from the end customer eg the referred seller (you) is paid by the buyer (your customer) at your normal payment terms (say 14 days) and then subsequently pays our referral fees within our normal payment terms (30 days) so there are no out of hand expenses.
    • Buyers Model Example – In the case of the buyer model the fee is not payable until implementation as commenced (at the same time as you would normally have paid any consultant for the results of the first part of the project are completed.
    • Asset Creation Example – equity is allocated up front because value has been created by IP transfer OR feeds are paid as value is realised by real revenue.
  • Real value creation requires generous sharing. These terms may be varied by mutual agreement upfront (in advance of the referral) only in very specific cases –
    • High margin scenarios are typically double the above rates.
    • Low margin commoditised scenarios are potentially lower rates. Percentages may only be reduced at our discretion after production of documented examples and industry benchmarking
  • We only do serious referrals. If you are sent a link to this page we think there is a real referral opportunity meeting all these principles.
  • We do not make referrals (or take commissions or any form of payment) and it should not be implied in any way in two specific circumstances. These are when –
    • We are acting on behalf of a client exclusively (signed industry exclusivity agreement/clause which is not common) or
    • Independence is required (which is a material part of our work) eg technology selection or review for signed clients.