A business owner who has built up and run the business over a substantial
period might wish to exit that business for various reasons. There might be
a number of ready and willing purchasers of the business to whom the owner
might sell, but the owner might not know of them or be able to find them.
To make the task of finding potential purchasers easier, the owner can
employ the services of a specialist broker (a “finder”) whose business it
is to find and introduce potential purchasers of businesses.
It is important that the seller ensures that its appointment of a “finder”
is on detailed terms of agreement, covering all relevant aspects of the
intended relationship between seller and finder. This will minimise the
risk of misunderstandings and disputes arising between them. Two new forms
of Agreement have been added to the Corporate folder, one to cater for a
sale of all assets of a business, the other to cater for sale of all shares
in a business.
Under the Finder’s Fee Agreement (Sale of Shares), a company appoints the
“finder” as an intermediary to identify and introduce to the company
potential buyers of all of the company’s shares. If the finder introduces a
buyer which proceeds to buy the shares, the finder earns a commission from
the company in return for that successful introduction.
Under the Finder’s Fee Agreement (Sale of Business), a business owner
similarly appoints a finder to introduce potential buyers of all of the
business assets, in return for a commission paid by the business.
These new templates contain detailed terms to protect and clarify the legal
position of both parties. These forms of agreement are suitable for use
· The seller wishes to propose to a finder terms of appointment to govern
the appointment; or
· A finder wishes to have standard terms of business for appointment by a
Certain provisions in both of these documents slightly favour the finder,
making them particularly suited for use by a finder who requires standard
terms on which it can operate when dealing with sellers.
Both forms of agreement can be used to appoint a finder on either an
exclusive or non-exclusive basis.
These template forms both contain optional clauses which can be added where
the finder is also required by the seller to provide additional services to
facilitate the sale process after the finder has found and introduced a
purchaser. For example, the seller might require the finder to assist with
negotiating terms of sale, advise on strategy or structure, or provide
liaison between seller and purchaser. In return the seller agrees to pay a
monthly retainer fee.
Once a finder has introduced a seller to a purchaser, the seller and
purchaser will need to negotiate and set out in a detailed agreement all of
the terms of sale. At that stage, you might wish to make use of one of the
various template sale agreements which you can find in the Shares, Company,
Asset or Business Sale Documents subfolder in the Corporate folder.
The contents of this Newsletter are for reference purposes only and do not constitute
legal advice. Independent legal advice should be sought in relation to any specific