This Checklist sets out the most important sections of a financial advisor engagement letter and lists negotiating points for both the buyer and the advisor in connection with an M&A transaction.

A financial advisor engagement letter is a contract that sets out the terms of the relationship between a buyer or seller in an M&A transaction and its financial advisor. This Checklist focuses on engagement letters between buyers and their financial advisors. Even before a buyer contacts a seller and enters into a confidentiality agreement, the buyer usually retains a financial advisor to assist the buyer in achieving its goals.

The engagement letter is an important document for both parties. The advisor must pay careful attention to how much and when it will be compensated for its services. The buyer must make sure that the terms of the engagement letter do not obligate the buyer beyond what it expected. While many of the provisions are standard and customary, certain provisions can be negotiated.