How the sponsor is compensated is negotiable and may vary depending on the deal. However, to give you an idea of standard compensation, remember there are two parties in a syndication: the limited partners and the sponsor. The sponsor earns their compensation via the acquisition fee, due diligence costs, and asset management. As the sponsor is responsible for finding the deal, they earn an acquisition fee (usually 2%). This fee is based on the purchase price and covers all the sponsor’s costs to find and initiate the deal. Another way a sponsor is compensated is through a due diligence fee which includes what the sponsor put upfront for the earnest deposit and inspection and appraisal costs. For multi-million syndications, this fee may be in the thousands. Finally, the third most common means of compensation is through the asset management fee. This includes property management fees and ensuring the business plan is carried out. This fee is also around 2%. All sponsor compensation should be outlined in the PPM.