Sell-side Investment Bank Engagement Letter

Summary

This template is an engagement letter used by sellers to hire an investment bank for the purpose of acting as a sell-side M&A advisor in an auction setting. This template includes practical guidance, drafting notes, and alternate clauses. Most large, sophisticated investment banks with a national presence, and even smaller regional investment banks, maintain their own form of engagement letter and may insist that their template be used as the starting point for negotiations. Where an investment bank is not amenable to using an alternate template, you may still use this template as a guidepost for certain provisions as you draft and negotiate the definitive engagement letter. You can also use this engagement letter in non-auction M&A engagements. The engagement letter addresses five key areas: (i) defining a "transaction," (ii) defining the "consideration value" that the seller receives in the transaction, which is the primary component of calculating the investment bank's compensation, (iii) a "fee tail," (iv) representations regarding information supplied by the seller to the investment bank, and (v) indemnification by the seller. For a full listing of related private equity and asset acquisition content, see Private Equity Transactions Resource Kit and Asset Acquisition Resource Kit. For a discussion about drafting and negotiating investment bank engagement letters, see Auction Process in M&A Deals — Investment Bank Engagement Letters. For a drafting checklist, see Sell-side Investment Bank Engagement Letters Negotiation Checklist.