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SERVICE RENDERED
Somewhere in the first few paragraphs, the contract should define the basic agreement. This will be phrased something like this: "The broker expressly agrees that it shall perform the services to . . ."
These may include:
- Familiarizing itself with the business, operations, properties, financial condition, and prospects
- Assist in identifying and evaluating candidates for a potential transaction
- Assist in the preparation and implementation of a marketing plan and in the preparation of a memorandum describing the Company and its business operations
- Contact potential candidates that are appropriate for a potential transaction
- Advise on the desirability of a transaction
- Assist with negotiation strategies
- Assist in making presentations to the board of directors
Again, each deal is different, so the above list is not necessarily what you should include in your own contract. For example, you might want the broker to conduct a valuation and compare the results to industry standards.
Remember that the duties listed are terms of a contract. So if there is a breach, then the contract may not necessarily be enforceable and the fees may not be due. Then again, the seller has duties, too. You need to disclose the necessary information -- financials, goals, risk factors, and so on -- to facilitate the adviser's performance.
Generally, the broker will want an exclusive engagement. This means that for a fixed period of time, the broker gets a commission regardless of who buys the business. That commission amount will be based on the same formula as if the broker itself had sold the business. Try to limit this time period -- to, say, six months.
