Are there standard terms and issues for investment banking fee agreements?
The following provisions and issues arise in most investment banking agreements: · Exclusivity. Most investment banks require exclusive rights to sell securities for a stated time period, generally in the range of three months to six months, but it can be longer. Although some freelance placement agents or brokers are willing to work on a nonexclusive basis, it’s generally futile to attempt to get a reputable investment banker to agree to work on a nonexclusive basis. In some larger deals, similar to IPO’s in scope, however, the deal may have a second investment banker or a co-manger. · Term. Most contracts have a term of three months to one year. Being tied to a banker who is not producing can harm your company. You should seek to be able to terminate on thirty days notice. · Tails. Most investment bankers insist on being paid for money received after their services are terminated, if it’s raised from investors they introduced. This provision is called the “tail.” The duration of the
