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Finder's Fee Agreement
"I need a finder's fee agreement for a consultant who will introduce potential investors for a property development project, with a fee of 2% of the investment amount secured, payable in GBP, and a confidentiality clause to protect sensitive information."
What is a Finder's Fee Agreement?
A Finder's Fee Agreement sets out the payment terms when someone helps connect parties to a successful business deal. It's commonly used in UK mergers and acquisitions, property transactions, and investment introductions to reward intermediaries who bring valuable opportunities to the table.
The agreement specifies key details like the fee amount (usually a percentage of the deal value), payment timing, and any conditions that must be met. Under English law, these contracts need clear terms about who's paying, what triggers the payment, and how long the finder's rights last. Many regulated sectors, especially financial services, have strict rules about who can receive finder's fees.
When should you use a Finder's Fee Agreement?
Use a Finder's Fee Agreement when working with intermediaries who connect you to valuable business opportunities. This proves especially important in UK property deals, company acquisitions, or investment fundraising where someone helps broker introductions that lead to completed transactions.
Getting the agreement in place before any introductions happen protects both parties and prevents disputes about compensation. It's particularly crucial in regulated sectors like financial services, where the FCA requires clear documentation of referral arrangements. The agreement helps avoid misunderstandings about payment timing, amounts, and what constitutes a successful introduction.
What are the different types of Finder's Fee Agreement?
- Percentage-Based Agreements: Most common in UK property and M&A deals, calculating fees as 1-5% of transaction value
- Fixed-Fee Structures: Set amount paid upon successful introduction, popular in recruitment and smaller deals
- Success-Fee Only: Payment triggered solely by deal completion, common in investment introductions
- Tiered Commission: Scaled fees based on deal size or complexity, used in larger corporate transactions
- Hybrid Arrangements: Combining upfront fees with success-based payments, often used in longer-term finder relationships
Who should typically use a Finder's Fee Agreement?
- Business Owners: Companies or individuals seeking acquisitions, investments, or strategic partnerships who agree to pay finder's fees
- Professional Intermediaries: Business brokers, corporate finance advisors, and consultants who facilitate introductions
- Investment Banks: Financial institutions connecting buyers with sellers in larger M&A transactions
- Property Agents: Real estate professionals introducing buyers to commercial property opportunities
- Legal Counsel: Solicitors drafting and reviewing agreements to ensure compliance with UK regulations and protect client interests
How do you write a Finder's Fee Agreement?
- Deal Specifics: Outline the transaction type, potential value, and expected timeline
- Fee Structure: Determine payment terms, percentages, and any performance conditions
- Party Details: Gather full legal names, addresses, and registration numbers of all involved parties
- Service Scope: Define exactly what constitutes a successful introduction or connection
- Duration Terms: Set clear timeframes for the agreement and any exclusivity periods
- Regulatory Check: Confirm FCA requirements for financial service introductions
- Payment Triggers: Specify exactly when and how the fee becomes payable
What should be included in a Finder's Fee Agreement?
- Party Identification: Full legal names, addresses, and registration details of finder and client
- Services Description: Precise scope of introduction services and success criteria
- Fee Structure: Clear payment terms, calculation methods, and triggering events
- Duration: Agreement start date, end date, and any extension provisions
- Confidentiality: Protection of sensitive business information and contact details
- Exclusivity Terms: Any restrictions on working with competitors
- Governing Law: Explicit statement of English law jurisdiction
- Termination Rights: Conditions for ending the agreement and final fee obligations
What's the difference between a Finder's Fee Agreement and an Agency Agreement?
A Finder's Fee Agreement differs significantly from a Agency Agreement in several key aspects, though both involve intermediary relationships. Understanding these distinctions helps choose the right agreement for your situation.
- Scope of Authority: Finder's Fee Agreements only cover introductions and matchmaking, while Agency Agreements grant broader powers to negotiate and act on behalf of the principal
- Legal Relationship: Finders are independent introducers with no authority to bind parties, whereas agents can create legal obligations for their principals
- Payment Structure: Finder's fees typically involve one-off payments for successful introductions, while agency relationships often include ongoing commissions or retainer fees
- Regulatory Requirements: Agency relationships face stricter regulatory oversight and fiduciary duties under English law, particularly in regulated sectors
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