Chapter 01

The mandate: what a broker is engaged to do

A mandate is the agreement that turns an adviser into a representative. It sets out what will be done, in whose name, for how long, and under which restrictions.

What the document settles

A mandate answers four questions before any buyer is approached. Which entity or which set of assets is being offered. Whether the broker acts exclusively or alongside others. How long the engagement runs and how it ends. And what the adviser is allowed to disclose without asking again.

Most disputes later in a process trace back to one of those four points being left vague. An owner who assumed the mandate covered only one country, or a broker who assumed a competitor could be approached, will discover the gap at the worst possible moment.

Exclusive or open

An exclusive mandate gives one adviser the right to bring the business to market for a set period. In return the adviser invests in preparation: reworking figures, writing the memorandum, building a list of candidates.

An open mandate spreads the work across several parties. It looks like a wider net, but in practice it often narrows the result. The same business appearing through three channels signals to buyers that nobody is in charge, and it makes confidentiality almost impossible to hold.

Duration and tail

A typical term runs long enough to complete a full cycle: preparation, outreach, talks, an offer, an investigation and a transfer. Six to nine months is common for an online business, longer for anything with staff, warehousing or complex supplier agreements.

Most mandates include a tail clause. If a buyer who was introduced during the mandate returns after it has ended, the adviser is still entitled to the agreed remuneration. The clause is standard practice and it protects both sides from an artificial pause in the talks.

Where responsibility sits

A broker organises the process, prepares the documentation and manages the flow of information. The owner remains responsible for the accuracy of what is handed over. No adviser can warrant figures they did not produce.

That division matters during due diligence. Questions about a supplier contract or a customer database go back to the owner. The adviser makes sure they arrive in a form the buyer can work with, and that the answer is given once rather than four times.

Signals of a workable mandate

• The scope names the entity, the assets and the countries involved
• The remuneration model is written out in full, including what happens if the process stops
• There is a defined list of parties who may not be approached without consent
• Reporting is agreed: how often, in what form and with how much detail
• Termination is possible on notice, in writing, without a dispute over who owns the buyer list

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