The Importance of an Acquisition Agreement

If you’ve wondered “What is an acquisition agreement?” or “Why is an acquisition agreement important?” then let me explain how it protects you, the buyer.

The acquisition agreement is a very important part of the relationship between a client and their acquisition agent. If you are interviewing acquisition firms and they do not have a standard acquisition agreement they use with each client, it’s safe to assume they either do not do a lot of acquisitions or they aren’t really focused on that segment of their business. 

The purpose of the acquisition agreement is to protect the client and clearly define the service that will be provided by the agent. It’s all about commitment, in this market every opportunity is critical, you cannot risk having someone working for you that is not fully committed to your project. It is very important that the responsibilities of both the agent and the client are clearly defined. 

An acquisition agreement typically has provisions for a retainer, the retainer solidifies the commitment between the parties. When a client provides part of the agent’s fee, upfront, it shows that the client is serious about the project and understands that they are hiring the agent to work on their behalf, on an exclusive basis. The retainer obligates the agent as well, both fundamentally and legally. It is simply understood that when someone gives you money, you owe them the service in return. 

A word of caution, be wary of retainers or fees that seem insignificant. A competent acquisition firm will typically collect 20% – 50% of their total fee at the beginning of the project. The amount of a retainer should be representative of the amount of commitment. 

The agreement should be clear and concise, it should have both a termination date and an extension provision. It should clearly define which model of aircraft is being searched for and may even include specifics such as year model and budget. The acquisition agreement should clearly define which expenses are the responsibility of the client and which are covered by the agent. If the client will be responsible for the agent’s expenses some type of pre-approval of expenses should be required. 

A final point, every agreement has standard language that excludes verbal agreements, be sure that the agreement reflects everything that the agent has promised verbally. 

If you have any questions about one of our agreements or someone else’s, please don’t hesitate to contact me. 

My primary goal is to protect aircraft buyers, I’m excited that you have decided to hire someone to represent you in your next aircraft purchase, I’m even more excited if it’s us, but my commitment to helping you the buyer isn’t limited to our clients. Please don’t let a nagging issue go unaddressed, shoot me an email and I’ll see if I can help!