Finder's Fee Agreement Template

In plain language: Identifies the company and the finder as legal entities, states the date of the agreement, and sets out the commercial purpose — the finder will make introductions in exchange for a fee on qualifying transactions.

Common mistake: Using a trade name instead of the registered legal entity name for either party. If the entity name on the agreement doesn't match the contracting party in the underlying transaction, enforcing the fee becomes complicated.

In plain language: Defines the type of introductions the finder is authorized to make — investor introductions, customer referrals, or acquisition targets — and whether the finder has exclusive rights in that category or geography.

Common mistake: Granting broad exclusivity without geographic or category limits. An exclusive agreement with no boundaries can prevent the company from pursuing any deal without owing a fee, even for relationships it developed independently.

In plain language: Specifies exactly what counts as an introduction that triggers fee eligibility — typically a first written introduction of a counterparty not already known to or in active discussions with the company.

Common mistake: Omitting a 'previously known' carve-out. Without it, a finder can claim a fee on a deal the company was already pursuing independently, creating a dispute over causation that is expensive to litigate.

In plain language: States the fee as a fixed dollar amount or a percentage of transaction value, defines what constitutes the calculation base, and addresses tiered or capped structures where applicable.

Common mistake: Using 'transaction value' without defining it. Whether deferred consideration, earnouts, or escrowed amounts are included in the base dramatically affects the fee — courts will not fill this gap favorably.

In plain language: Sets the specific event that makes the fee due and payable — typically the closing date of the transaction — and the number of days within which payment must be made after that trigger.

Common mistake: Tying the payment trigger to 'receipt of funds' when the deal includes non-cash consideration such as stock or earnouts. Specify how non-cash components are valued and when the fee portion attributable to them is due.

In plain language: Requires the finder to represent that they are not required to be registered as a broker-dealer under applicable securities law, and shifts indemnification liability to the finder if that representation is false.

Common mistake: Omitting this clause entirely in capital-raise agreements. US federal and state securities regulators have pursued enforcement actions against both finders and companies when unregistered finders solicited investors for compensation.

In plain language: Sets the duration of the agreement, the conditions under which either party may terminate early, and the tail period during which the finder retains fee rights after termination for previously made introductions.

Common mistake: No tail period at all. Without one, a company can terminate the agreement the day before a deal closes with a finder-introduced party and owe nothing — courts have awarded damages in such cases, but only after costly litigation.

In plain language: Obligates both parties to keep the terms of the agreement and any confidential information exchanged in the course of making introductions strictly private.

Common mistake: Omitting the counterparty's identity from the definition of confidential information. Finders who disclose the names of introduced parties to competitors can undermine the deal and expose the company to liability.

In plain language: Specifies which jurisdiction's law governs the agreement and whether disputes are resolved by litigation, mediation, or binding arbitration.

Common mistake: Choosing a governing law with no connection to where either party operates. Several jurisdictions apply local securities law to finder arrangements regardless of the contractual choice — a mismatch creates regulatory ambiguity.

A finder's fee agreement is a contract between a company and an individual or firm (the finder) that compensates the finder for introducing a qualifying counterparty — such as an investor, acquirer, or customer — who goes on to complete a defined transaction. It specifies what counts as a qualifying introduction, the fee percentage or amount, the event that triggers payment, and how long the finder's rights last after the agreement ends. Without a signed agreement, fee disputes are resolved by courts interpreting implied contracts — an expensive and uncertain process for both sides.

For capital raises involving equity investments, market practice in the US typically runs 3–5% of gross proceeds for finders without broker-dealer registration. For M&A transactions, the Lehman formula (5% on the first $1M, 4% on the second, 3% on the third, 2% on the fourth, and 1% thereafter) or a modified version is commonly referenced. Customer referral fees vary widely by industry — 5–15% of the first year's contract value is a common range for B2B software deals. All percentages are negotiable and should reflect the finder's contribution relative to the deal complexity.

This is one of the most significant legal risks in finder arrangements involving securities. Under Section 15(a) of the Securities Exchange Act of 1934, any person who effects transactions in securities for compensation — including soliciting investors — must be registered as a broker-dealer with the SEC. Finders who do more than make a passive introduction and receive transaction-based compensation may trigger this requirement. The SEC has not created a formal exemption for finders, though there is a long history of no-action letters for narrowly scoped arrangements. Legal advice specific to the transaction is strongly recommended before engaging a finder for a capital raise involving securities.

A tail period is the time after the agreement's expiration or termination during which the finder retains the right to receive a fee if a transaction closes with a counterparty they introduced while the agreement was active. Without a tail, a company can terminate the agreement immediately before a deal closes and owe nothing. Tail periods of 12 months are standard for most transactions; M&A processes that routinely take 12–18 months to close may warrant an 18-month tail. The tail should be tied specifically to named counterparties introduced in writing during the active term.

The terms are often used interchangeably, but in practice a finder's fee agreement typically covers a one-time or limited-scope arrangement tied to a specific transaction — a funding round, an acquisition, or a large contract. A referral agreement is more commonly used for an ongoing commercial arrangement where one party continuously refers customers to another in exchange for a recurring commission or fee. The regulatory considerations also differ: finder arrangements involving securities transactions carry broker-dealer registration risk, while straightforward customer referral programs generally do not.

In many jurisdictions, an oral agreement for a finder's fee may be enforceable as an implied or quasi-contract if the finder can prove the parties reached an agreement and the company was unjustly enriched. However, these claims are difficult and expensive to litigate, and courts apply varying standards of proof. Several US states require certain finder or brokerage agreements to be in writing to be enforceable. A signed written agreement is the only reliable protection for both the finder and the company.

Yes. The agreement itself and the identities of introduced counterparties are commercially sensitive — a finder who discloses the target's name to a competitor or a rival bidder can materially damage the transaction. A confidentiality clause should cover the existence and terms of the agreement, the identities of all counterparties introduced, and any financial or strategic information shared in the course of making introductions. If deeper information-sharing is anticipated, a separate mutual NDA signed before substantive discussions is advisable.

Competing finder claims arise when the company has multiple active finder agreements and two finders independently introduce the same counterparty, or when one finder argues their earlier contact causally led to the transaction. The best protection is a written registration process: require each finder to submit a written notice naming the counterparty immediately upon making an introduction, and maintain a dated log. The first registered written introduction for a given counterparty takes priority. Without this process, the company may face simultaneous fee claims from multiple finders on a single transaction.

Notarization is not required for a finder's fee agreement to be enforceable in most jurisdictions. A signed agreement with dated signatures from both parties — including via qualified electronic signature — is generally sufficient. Some parties include a witness signature block as an additional authentication measure, particularly for high-value transactions, but this is a matter of preference rather than legal requirement in most cases.