本文发表在 rolia.net 枫下论坛One boss just came out of a conference call and he started to discuss how the engagement letter should be termed when advising buyside. As most of people knows, M&A advisory fees are normally a percentage of transaction value. (it could be either equity value or enterprise value with specified adjustments). In this case, it is based on equity value of the company being acquired. The interesting thing is that our fees got increased because the additional restricted shares (which is part of the target's defence protection against undesired take-over) warded to senior management/board members were finally approved in yesterday's shareholder meeting.

The point is whether it makes sense to base fees on transaction value while you are acting for the buy side as your responsibililty is to minimize the purchase price for the buyer. There is obvious conflict here. Or the fee should be set at target level subject to potential increase by achieving lower price. However, most engagement letters are not drafted this way. Higher price, higher fee.

This reminds me of real estate agent contract which works in a very similar way.更多精彩文章及讨论，请光临枫下论坛 rolia.net