Disputes over fees and the terms of engagement with M&A intermediaries and financial advisers

1. Checking the contract, the claim and the course of the work

Where a disagreement over fees arises with a provider engaged to support an M&A transaction, the first thing to check is what the contract that was concluded provides. The names vary — an intermediation agreement, an advisory agreement, a financial advisory agreement — but what matters is the substance rather than the name: whether the arrangement is one in which the provider supports both parties to the transaction, or one in which it gives advice for one party alone. Where both parties are supported, how situations in which their interests conflict are dealt with is checked at the same time.

Who the parties to the contract are is a point that is often overlooked. There are cases where the shares are to be transferred by the shareholder personally while the contract has been concluded with the company, and cases the other way round. Who the fee can be claimed from, and who owes the obligation to pay it, is examined from this point.

As to the content of the contract, the matters checked are the scope of the work, whether there is a provision making the engagement exclusive, the term of the contract, the procedure where it is to be ended before the term expires, and the provisions on reporting. As to the fees, an initial fee, fees payable at regular intervals, a fee payable at the time of the basic agreement, and a fee payable on conclusion of the transaction are often each provided for separately, so which fee is in dispute is identified.

The course of the work is also set out in chronological order. This covers the list of candidates presented, when and by what means each individual candidate was introduced, records of meetings and of materials provided, the exchange of letters of intent and basic agreements, and the relationship with information the company itself already held. In particular, where fees after the contract has ended are in issue, as discussed below, which candidate was introduced, when, and by whom carries decisive weight.

For providers that support M&A transactions involving small and medium enterprises, a registration system has been established in connection with a national subsidy program. Whether the other party is registered is worth checking, but registration alone does not determine the validity of the contract or whether a fee can be claimed. Where being registered is made a condition under the contract, however, or where the account given of the registration position differed from the facts, that calls for separate examination.

2. When a success fee arises, and how it is calculated

For a success fee, the first point to check is what is treated as the conclusion of the transaction. Some provisions take the signing of the basic agreement as the reference point, some the signing of the definitive agreement, and some the completion of closing, and which of these has been adopted changes the position where the transaction breaks down partway. How matters stand where the definitive agreement was signed but closing was not reached is sometimes not addressed in the contract.

The next point is the basis of calculation. Some provisions take the consideration for the shares transferred as the basis; others take an amount that includes the target company's liabilities and loans from its officers. A structure in which the rate falls in stages is often used, and which amount a given rate is applied to can make a large difference to the result. Where a minimum fee is provided for, it usually applies as a floor where the amount produced by applying the rates falls below that figure. Whether the conditions for a fee to arise are met, and whether the situation is one to which the minimum fee provision applies, are checked as separate questions.

How matters stand where the transaction structure changes from what was originally envisaged is also in issue. Where a transfer of shares was envisaged but a business transfer or a company split is used instead, where only part of the shares is transferred, or where the transfer is carried out in stages, whether the provisions of the contract apply as they stand is checked.

Who bears the fee also needs to be checked. Where both parties are supported, the contract may provide for fees to be received from both the transferring side and the acquiring side. In that case, what each of the contracts provides, and how far the company itself is to bear the fee, are checked.

We do not ourselves carry out valuations of enterprise value, business value or share value. Where a valuation is needed in a dispute over the basis on which the fee is calculated, we work with accounting and valuation experts. The legal examination — whether the amount of the fee is excessive in the light of what the contract provides, and whether it is consistent with what was explained — is what we take on.

3. Termination of the contract and tail provisions

Disagreements over fees not infrequently arise where the company wishes to end the contract before the term expires, or after it has done so. The first point to check is the circumstances in which the contract can be brought to an end. In addition to the expiry of the term, the contract may provide for termination on notice given a set period in advance, and for termination on the ground of the other party's non-performance. Where there is a provision making the engagement exclusive, whether it restricts engaging another provider during the term, or negotiating with the counterparty directly, is also checked.

Where the contract is assessed as a mandate or a quasi-mandate, its relationship with the rule under which each party may terminate at any time also falls to be considered. Where the contract contains a special provision restricting this, how far that provision is effective depends on the content of the contract and the circumstances in which it was terminated. Whether fees and expenses can be claimed for the work done up to the point at which the contract ended is also in issue. Under a contract centered on a success fee, a fee does not arise as a matter of course in proportion to the volume of work carried out, and the question is examined in accordance with what the contract provides. Where, however, a divisible part of the result to which the fee relates has already been provided and the company derives a benefit from that part, whether a fee in proportion to that benefit can be claimed is examined separately in the light of the content of the contract. Damages also call for care. Even where a party may terminate at any time under the law, a party that terminates at a time disadvantageous to the other must compensate the loss caused to the other party, except where there were unavoidable grounds. That a contract can be terminated, and that terminating it carries no burden, are separate matters.

The other point that arises after a contract has ended is the so-called tail provision. Where, after the contract with the provider has ended, the company finds a counterparty by some other route and concludes a transaction with it, a fee may be claimed on the basis of the contract that has ended. This follows from a provision under which a fee arises where a transaction is concluded within a set period after the contract ends.

The points in dispute in this situation can broadly be set out as follows. First, whether the counterparties covered are identified. The position differs according to whether the provision is confined to candidates the provider was involved with and actually introduced, or extends to every party with whom there was contact in some form during the term of the contract. Whether a list of candidates was delivered in writing, and whether the company checked it, also carries weight.

Second, the period. How long a period after the contract ends is covered, and whether time runs from the point at which the contract ended or from the point at which notice was given, are checked.

Third, the range of transactions covered. Whether it is confined to a transfer of shares, or extends to capital alliances, business alliances and transfers of assets, depends on how the provision is drafted.

Fourth, the extent to which the provider was involved in the transaction concerned. This point calls for care. A provision on fees after the contract has ended is in some cases included so that a fee arises even where the provider is not involved after the contract ends. It does not follow, therefore, that a fee does not arise, or is reduced, merely because the provider was not involved in the negotiations after the contract ended. On the other hand, where the provision lays down requirements of some kind as to the link between the introduction and the conclusion of the transaction, or as to involvement after the contract ends, the extent of that involvement becomes the point in dispute. Checking what the provision makes a requirement is the starting point.

As to the counterparties covered, the company introduced as a candidate and the company that in fact makes the acquisition may differ. Whether a subsidiary of the party introduced, or a company incorporated for the purpose of the acquisition, is covered by the provision where it becomes the acquirer is a question on which the answer differs according to how the provision is drafted.

For M&A transactions involving small and medium enterprises, the Small and Medium Enterprise Agency has published guidelines, which indicate, among other things, that provisions on fees after the contract has ended should set the counterparties covered and the period appropriately. These are not legislation, however, and the fact that the contract is not in line with the content of the guidelines does not directly lead to the conclusion that a claim for a fee is to be denied. On the other hand, where compliance with the guidelines has been incorporated into the contract as an obligation, that falls to be examined separately as a matter of contractual obligation. Conversely, it also cannot be said as a matter of course, merely because the contract contains such a provision, that a fee always arises where a transaction is concluded within the period. The question is how the provision is to be read as to the counterparties and the range of transactions it covers.

4. Duties of explanation, conflicts of interest, and limitations of liability

The content of the duties owed by a provider differs according to the nature of the contract. A contract under which advice is given for one party and a contract under which the provider stands between the two parties and supports the conclusion of a transaction involve different expected roles, and even contracts bearing the same name differ according to what has been laid down as the scope of the work. It is therefore not possible to proceed on the basis that every provider owes the same duties.

In practice, the points on which it is most often argued that the explanation was insufficient are the fee structure and the basis of calculation, the effect of a provision making the engagement exclusive, provisions on fees after the contract has ended, the existence of other candidates and the terms on offer from them, and the effect of a change in the transaction structure. When, and using what materials, an explanation of these points was given becomes the point in dispute.

An arrangement in which both parties are supported has a structure in which interests conflict, because terms that are favorable to one party may be unfavorable to the other. The arrangement is not in itself unlawful, but how the receipt of fees from both sides, and the handling of information obtained in the course of the negotiations, are provided for in the contract and how they were explained need to be checked.

A contract may contain a provision limiting the scope of liability, or a provision capping liability at the amount of the fees received. What is checked is the range of claims to which the provision applies, whether it contains a carve-out for cases involving intent or gross negligence, and whether a deadline is laid down for notifying a claim. The existence of such a provision does not necessarily mean that the cap applies as a matter of course to every claim.

Even where the view is taken that the explanation was insufficient, it does not follow that the whole of the fee becomes subject to repayment or to compensation as a matter of course. Whether there was a breach of duty, what loss resulted from it, and whether there is a causal link between the two are questions to be examined separately from whether the claim to the fee itself has arisen.

The liability of the provider and the liability of the seller or the buyer as the counterparty to the transaction are also separate matters. Claiming against the seller for breach of representations and warranties and taking issue with the explanations given by the provider differ both in their requirements and in the party against whom the claim is brought. On the seller's liability, see the guide on breach of representations and warranties in M&A and indemnity claims.

5. Responding to claims for fees, claims for repayment and claims for damages

For the party receiving a claim, the starting point is to ask for the provision relied on as the basis of the claim, and for disclosure of the steps by which the amount claimed was calculated. The breakdown of the amount taken as the basis of calculation, the rate applied and the treatment of consumption tax are checked against what the contract provides. Where payment is to be withheld, the reason for doing so is made clear, and the decision is taken having regard also to late payment damages.

Where repayment of fees already paid is to be sought, the way the claim is to be framed is considered. The facts that need to be asserted differ according to whether the assertion is that the payment lacked a basis under the contract, or whether compensation for loss is sought on the ground that the explanation was insufficient.

The matters to be examined are the same from the position of the party bringing the claim. What matters is whether the wording of the contract, the records showing the course of the work, the reports actually made, and the nature of the involvement leading up to the conclusion of the transaction can be shown on the basis of materials. As regards the introduction of candidates, whether written notice and confirmation of its receipt remain can determine the outcome.

The central items of evidence are the contract and any documents amending it, proposal materials, lists of candidates, email exchanges, records of meetings, and records relating to payments. Notices terminating or ending the contract are often subject to provisions on the method and timing of giving them, so whether those provisions were followed is checked as well.

A dispute with the provider may arise in parallel with a dispute between the seller and the buyer. The approach needs to be decided with the whole picture in view, so that what is asserted in each of the procedures does not become inconsistent.

How we assist

For those facing a question about fees or the contract with an intermediary or financial adviser

On disputes concerning M&A intermediation and financial advisory agreements, we check the relevant materials and the sequence of events, and we assist with examining the rights and obligations arising under the contract and under the applicable legislation and the approach to be taken. According to the scope of the engagement, we conduct negotiations with the other side, act in court and other proceedings, and work with the experts required. When you contact us, please let us know through the inquiry form, so far as you are able, the current situation, whether any notice has been received from the other side, and any deadlines you are aware of. You can contact us at a stage when the materials are not yet complete.

Whether we are able to accept instructions, and the scope of the support we provide, are addressed individually after checking for conflicts of interest and related points.

Related pages

• Breach of representations and warranties in M&A and indemnity claims — whether and to what extent compensation can be claimed for problems that come to light after an M&A transaction has been carried out, deadlines for giving notice, and set-off and the withholding of payment.

• Termination of an M&A contract and refusal to close — the matters to consider where the carrying out of the transaction, or termination of the agreement, is disputed on the ground that a condition precedent has not been satisfied or that the agreement has been breached.

• M&A and business succession (practice area) — structuring M&A transactions, legal due diligence, drafting and negotiating agreements, support at closing, post-merger integration, and business succession.

Key legislation and official sources

English translations of legislation are provided for reference. The Japanese texts are authoritative.

Where it appears	Legislation	Source type
Mandate and quasi-mandate; termination by either party at any time; compensation where termination is at a time disadvantageous to the other party, and unavoidable grounds	Civil Code（民法）	Japanese legislation
Remuneration where a mandate ends partway; remuneration in proportion to the benefit derived from a divisible part of the result	Civil Code（民法）	Japanese legislation
Termination on the ground of non-performance; compensation for loss caused by non-performance and in tort; restitution of a payment made without a basis	Civil Code（民法）	Japanese legislation
Late payment damages	Civil Code（民法）	Japanese legislation

Legal information reviewed: 2026-09-18

Frequently asked questions

Contact

Where fees or the contract with an intermediary or financial adviser are in dispute

On disputes over contracts with M&A intermediaries and financial advisers, we check the relevant materials and the sequence of events, and assist with considering the rights and obligations arising under the agreements and the applicable legislation and the approach to be taken. To the extent instructed, we conduct negotiations with the other party, act in court and other proceedings, and work with other professionals where needed. When you contact us, please let us know through the inquiry form, so far as you are able, the current situation, whether any notice has been received from the other party, and any deadlines you are aware of. You are welcome to contact us before the documents have been gathered.

Contact us about a contract with an intermediary or financial adviser

Whether we are able to act, and the scope of our work, are confirmed individually after a conflict check.

Related Pages

Related Pages

Breach of representations and warranties in M&A and indemnity claims

A legal guide to problems that come to light after an M&A transaction has been completed, covering whether an indemnity claim can be brought and its scope, the deadline for giving notice, and the consideration of set-off and the withholding of payment.

Termination of an M&A contract and refusal to close

A legal guide to what falls to be considered where completion of the transaction, or termination of the contract, is in dispute on the ground that a condition precedent has not been satisfied or that the contract has been breached.

M&A and business succession (practice area)

An overview of our work on structuring M&A transactions, legal due diligence, the preparation and negotiation of contracts, support at closing, post-merger integration, and business succession.

This article is provided for general informational purposes only and does not constitute legal advice on any specific matter. Please consult us regarding your specific situation. The content is based on the laws and regulations in effect as of the date of the last update.