M&A Client/Intermediary Engagement Agreements
I am on the conference planning committee for the June, 2010 M&A Source Conference in Orlando, and wrote the following description of a workshop to be conducted for approximately 150 M&A intermediaries from across the country (and some international). I have lined up two dynamic M&A attorneys, one from Dorsey & Whitney in Palo Alto, CA and the other from Shumaker, Loop & Kendrick in Tampa, FL, to conduct a workshop on establishing the proper legal framework for the relationship between M&A intermediaries and their clients.
Right From the Start: Negotiate the M&A Client/Intermediary Representation Agreement You Want – And Need
The M&A Process Flow begins with positioning the Client/Intermediary relationship, and that first step culminates with signing the engagement agreement. While some intermediaries use very short, generalized letters of agreement to define the terms of the engagement, others will use a detailed, multi-page contract that not only details the relationship, it addresses contingencies in the event of specified occurrences. Regardless of approach, there are certain elements that should be in all representation agreements, and others that the prudent intermediary will want to have. Further complicating the picture, what may begin as a straight asset sale engagement can change forms through the course of a deal, such as to a securities transaction and/or to a short term joint venture with a later option to purchase (more likely when intellectual property is involved). Advance planning at the beginning stage can avert later difficulties.
This instructive session will discuss standard elements that all representation agreements should include, and many optional elements that may be prudent to secure the intermediary’s income, by reducing risk and wasted time. Among the issues discussed will be:
- Retainers and/or upfront fees for services rendered prior to transaction close
- Fiduciary duties to principals
- Whether to describe the services that will be rendered and the implications of doing so
- Implication of representing both parties, e.g. “dual agency”
- Assignment to broker-dealer (if applicable)
- Anticipating non-sale outcomes, like interim joint ventures, licensing and operating agreements
- Indemnification implications
- Mediation, arbitration and litigation
- Back-out fees, and more