Finder’s Agreement (Drafting)

Companies make finder agreements in a different kinds of businesses. Finder’s agreement may be made in relation to financing, strategic partners, acquirers, customers, or some other opportunity. The company hires a finder to identify potential opportunities for a fee. The arrangement between a company and a finder should be clearly documented with a Finder’s agreement.

 

FEATURES OF FINDER’S AGREEMENT:

 

1. COMPENSATION: The amount and type of compensation depends on the value of the finder’s contacts, the difficulty in closing the transaction, the expected value of the transaction, and the uniqueness of the finder’s services. From the company’s perspective, the ultimate goal is to give away as little as possible while still incentivizing the finder to do a thorough job and deliver on the opportunity.

 

2. EXPENSES: The parties should decide whether or not the finder is entitled to reimbursement for his or her out-of-pocket expenses. If reimbursement is available, the parties may want to require preapproval of expenses or set a cap on the amount of reimbursement.

 

3. IDENTIFICATION OF PROSPECTS AND CARVE-OUTS: The parties should determine a method to identify prospects that will be covered by the finder agreement. The company may want to limit the types of prospects the finder may identify, for example, prospects in a specific geographic region. The company may also seek the right to exclude certain prospects with whom it has a relationship already.

 

4. TAILS AND TERMINATION: The parties should agree on how long the payment obligations last after the termination of the finder agreement. The parties should also agree on the conditions under which the finder’s agreement can be terminated.

 

5. TAX CONSEQUENCES: Both the finder and the company should discuss any proposed arrangement with their tax advisors. There may be situations where a certain structure is more advantageous than another, in such situation tax liability should be fixed upon.

 

6. SECURITIES RULES: If the company is using a finder to identify potential investors, the company should be careful of using a finder who is not a registered broker-dealer. If the company pays anything that could be construed as a commission to an unregistered broker-dealer in connection with the sale of its securities, it might attract some legal complications.

Documents


Passport Photo

Passport photo of all parties.


PAN Card

PAN card of all parties.


Aadhar Card

Aadhar card of all parties.


Utility Bill

Utility bill of Electricity or Telephone.


Address Proof

Valid Address Proof of all the parties.


Licence

Valid Driving Licence of all the parties.


Terms and Conditions

Terms and Conditions between the parties.


Other Documents

Other documents will be intimated through e-mail.

FAQ

A Finder's Fee Agreement outlines the relationship and the compensation to be expected in a relationship where an incentive is being offered in exchange for new leads or clients.

The amount and type of compensation depends on the value of the finder’s contacts, the difficulty in closing the transaction, the expected value of the transaction, and the uniqueness of the finder’s services.

Saves time; helps growing business; carries lesser risk than any other type of advertising

In exchange for introducing the parties, the finder takes a commission from the brokered deal. In some situations, the finder's fee is paid by the buyer of the transaction, and in other cases, it is paid for by the seller. A finder's fee isn't legally binding, so it is often simply a gift from one party to another.

A finder's fee is a reward and thus a form of incentive to keep business contacts and resources communicating the needs of a company or organization to potential clientele or partners. While contracts are not required in such arrangements, structuring and agreeing to terms for finder’s fees can keep all parties in agreement on the scope of compensation that will be paid. This may be especially useful for contacts who repeatedly attract business to the company.

When your finders hunt down new business, you’ll have new connections you may have not had access to previously. After your business is able to qualify that this is either a qualified lead or someone who makes a verified purchase, you reward the person who brought you this lead.

Yes, real estate agents can pay referral fees to licensed persons.

Parties;Services;Status of Finder; Confidential Information.