Matt Levine, Columnist

Venture Capitalist Made Some Pretty Good Deals for Himself

Does 90 percent sound like a fair finder's fee?

May 15, 2015 at 9:15 PM UTC

Matt Levine is a Bloomberg Opinion columnist. A former investment banker at Goldman Sachs, he was a mergers and acquisitions lawyer at Wachtell, Lipton, Rosen & Katz; a clerk for the U.S. Court of Appeals for the 3rd Circuit; and an editor of Dealbreaker.

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Let's say someone has a thing that he wants to sell, and someone else wants to buy that thing, and they don't know each other, but you happen to know both of them. What should you do? One very tempting option would be:

When I say that this option is tempting, I don't just mean for me. A lot of people succumb to temptation! There is the case of Jesse Litvak, the former Jefferies mortgage-bond trader who was convicted of fraud for conducting negotiations in that vein.1431621188431 There is the case of Yves Bouvier, an art dealer arrested in Monaco for allegedly doing something like this with a Modigliani painting.1431621675922 If you are a middleman in opaque markets, your whole value-add is knowing the buyer and seller and their respective reservation prices. And one way to measure and be compensated for your value-add is to just take the difference between those prices for yourself. If the seller's reservation price is $1.5 million, and the buyer's is $3.5 million, then there's two million dollars of value to be gained in the transaction. By someone. Why not you?