The Success Fee Agreement is essential for professional service arrangements where compensation is tied to specific outcomes or achievements. This document is commonly used in the United States for various professional services, including M&A advisory, fundraising, business development, and consulting engagements. It establishes clear success criteria, calculation methodologies, and payment terms while ensuring compliance with applicable US federal and state laws. The agreement is particularly relevant when service providers prefer to align their compensation with client success, rather than charging fixed or time-based fees. It includes provisions for defining success events, payment triggers, service provider obligations, and client responsibilities, while incorporating necessary protective clauses for both parties. The document should be customized based on the specific nature of services, industry requirements, and applicable regulatory framework.
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1. Parties: Identification of the service provider and client, including full legal names and addresses
2. Background: Context of the agreement, including the purpose and general scope of services
3. Definitions: Key terms used throughout the agreement, including 'Success Event', 'Success Fee', 'Services'
4. Scope of Services: Detailed description of services to be provided by the service provider
5. Success Criteria: Clear definition of what constitutes a 'Success Event' triggering the fee
6. Fee Structure: Calculation methodology and payment terms for the success fee
7. Payment Terms: Timing, method, and conditions for success fee payments
8. Service Provider's Obligations: Specific duties, responsibilities, and standard of service
9. Client's Obligations: Client's responsibilities, including providing necessary information and cooperation
10. Representations and Warranties: Standard assertions about capacity and authority to enter agreement
11. Term and Termination: Duration of agreement and circumstances for early termination
12. Confidentiality: Protection of confidential information exchanged during the engagement
13. Governing Law and Jurisdiction: Applicable law and courts for dispute resolution
14. General Provisions: Standard boilerplate clauses including notices, amendments, assignment
1. Exclusivity: Used when service provider requires exclusive rights to provide the services
2. Tail Period: Include when success fee rights extend beyond termination date
3. Alternative Fee Arrangements: Used when providing for alternative payment structures if success criteria aren't met
4. Regulatory Compliance: Required for regulated industries or when dealing with specific regulatory requirements
5. Insurance Requirements: Include when specific insurance coverage is required for the services
6. Non-Circumvention: Used to prevent client from avoiding success fee payment through alternative arrangements
7. Force Majeure: Include when external events could impact achievement of success criteria
8. Data Protection: Required when personal data processing is involved in the services
1. Schedule A - Success Criteria Details: Detailed metrics, thresholds, and conditions that constitute success
2. Schedule B - Fee Calculation Methodology: Detailed formula and examples for calculating the success fee
3. Schedule C - Excluded Events/Transactions: List of specific events or transactions that don't trigger the success fee
4. Schedule D - Required Information and Documentation: List of documents/information needed to verify success events
5. Schedule E - Key Personnel: List of key team members involved in providing the services
6. Appendix 1 - Payment Examples: Illustrative examples of how success fee calculations work in different scenarios
Authors
Relevant legal definitions
Clauses
Relevant Industries
Financial Services
Professional Services
Investment Banking
Private Equity
Real Estate
Technology
Healthcare
Manufacturing
Energy
Telecommunications
Business Services
Consulting
Mergers & Acquisitions
Relevant Teams
Legal
Finance
Corporate Development
Business Development
Procurement
Strategy
Operations
Mergers & Acquisitions
Advisory
Risk Management
Compliance
Relevant Roles
Chief Executive Officer
Chief Financial Officer
Head of Business Development
General Counsel
Corporate Development Director
Investment Banking Director
Managing Director
Business Development Manager
Financial Advisory Director
Management Consultant
Partner
Vice President of Strategy
Chief Operating Officer
Procurement Manager
Contract Manager
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