A finder’s agreement is a business contract between a company and a finder, who may be an individual or another company. The specifics of the agreement depend on a company’s needs. The goal for the company is to focus on other aspects of the company while a finder does the work needed to grow the business.
A company typically hires a finder to identify business opportunities such as:
A finder is paid according to the specifics of the contract and:
The pay structure for a finder is often negotiated between the company and the finder, and then written out in detail in the finder’s agreement contract. Common pay structures in a finder’s agreement include:
Phantom ownership is a term that refers to the finder receiving the financial privileges of being a partial owner of the company. However, the finder does not have any real power to make decisions with regard to the company or vote on the company board.
A company is not automatically required by law to reimburse the finder for any of the finder’s expenses. Any reimbursement for a finder’s expenses must be determined while negotiating the contract.
Negotiating any business contract is an incredibly important task. This is especially true with a contract as crucial to the company as an agreement with a finder. You should speak to a business lawyer about negotiating a finder’s agreement. There are implications for both parties, including tax consequences, securities rules, and termination laws.
Last Modified: 12-30-2015 11:14 AM PSTLaw Library Disclaimer
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