Engagement letter

Definition

The contract that hires an advisor, setting the fee and the term.

Why It Matters

Sellers sign one before a listing goes live, and buyers sign one when they hire representation of their own. A handful of clauses decide almost everything else in it: what is charged and when, how long the exclusivity runs, and what tail survives after the letter ends. Read those before the rest, because together they answer the only two questions that matter later, which are what this costs and who has to be paid if the business sells a year from now to somebody the advisor once emailed.

In numbers: A twelve-month engagement at a $10,000 monthly retainer costs $120,000 before a single dollar of success fee is earned.