Selling your business will be complicated, emotional and, almost definitely, stressful. Once you decide to sell your business, the first step is usually hiring an intermediary – either a business broker or an investment banker. The intermediary will ask you to enter into an engagement agreement. This person is working for you and with you, so sellers frequently choose not to have a mergers and acquisitions attorney review the engagement agreement before signing it. Besides, you may think, what could go wrong? Plenty! To avoid uncertainty while ensuring a clear understanding of the specific terms you are committing to, at what cost, and for how long, hire an M&A attorney to review the engagement agreement.
Here are some deal points to keep in mind when entering into engagement agreements with intermediaries:
The agreement should provide a reasonable period of time for the intermediary to prepare a confidential information memorandum and market your business. This is known as the exclusivity period. The exclusivity period should be an amount of time that you and the intermediary believe is reasonably sufficient to market your business and close a deal; however, there should be a defined end point. A defined termination date will guide and incentivize the intermediary and create an orderly exit from the relationship with the intermediary.Read More