Henry Marshall reports on the ongoing “tail-gunner” controversy
The High Court has ruled that a so-called “tail-gunner” clause providing for a corporate finance adviser to be paid a success fee on the completion of a takeover in which the adviser was not involved is enforceable. These clauses are widely used and are common in estate agency contracts as well as in the corporate finance sphere.
The facts
In Seymour Pierce Limited v Grandtop International Holdings Limited [2010] EWHC 676 (QB) the claimant, a firm of corporate finance advisers, claimed the sum of £2.2m as a “success fee” after the completion of the purchase of the company which controlled Birmingham City Football Club by Grandtop International Holdings Limited (Grandtop). Notably, Seymour Pierce was not involved in advising Grandtop in respect of the eventual acquisition, although it had previously been engaged by Grandtop to advise it on its efforts to buy the club.
Seymour Pierce’s engagement letter provided that in the event of an offer for the target company being declared unconditional Seymour Pierce would be entitled to a success fee of £2.2m. Further,
