BrandAmerica views each assignment as our investment in the client’s project. To determine the value of BrandAmerica’s investment, we begin by dividing each assignment into phases with benchmarks and goals to define completion. The cost of personnel and other resources required to complete the assignment are reviewed in detail with each prospective client and further tailored to meet the client’s criteria. These costs determine the value of BrandAmerica’s investment in the project.
As an advisor, BrandAmerica will provide the planning and implementation services of a consultant, as well as the market contacts and placement capability of a broker. Compensation for the firm’s investment in each assignment is structured as a combination between the compensation rate typically charged by a consultant for time and a commission that would normally be charged by a broker for completing a transaction. The mechanisms which are used for compensation are the retainer and the success fee.
In a typical assignment, BrandAmerica absorbs the bulk of the transaction risk which equates to the hourly cost of its personnel. The balance is charged to the client in the form of a non-refundable retainer. The retainer only allows BrandAmerica to partially cover a portion of its overhead cost incurred during the assignment period. The actual compensation for our investment comes in the form of a success fee, which is based on a percentage of the value that we add through the advisory assignment for the client.
The Success Fee
This fee is based upon a percentage of the value that BrandAmerica creates for its clients. Factors considered when determining the success fee include the hours invested, the degree of difficulty and the value added. Success fees are normally billed upon completion of the assignment or upon the completion of significant milestones during the assignment and are usually paid in the form of cash, an interest in the business, or some combination thereof. Compensation issues related to the assignment are addressed in detail within a mandate letter.
The Mandate Letter
This letter is an agreement which defines the objectives of the assignment and the services to be rendered by BrandAmerica to complete the assignment. The letter also defines the rights and responsibilities of both parties during the term of the engagement. Before an assignment begins, the mandate letter is agreed to and signed by BrandAmerica and the client.