What is clawback?
This is a clause/term in the Sale Agreement that provides the buyer with a certain level of protection should clients leave during the handover period. As payment for the sale tends to be staggered, clawback is normally in operation during this handover period and if triggered affords protection at an agreed ratio proportionate to the value of fees lost. The vendor would expect to have a right of discovery and be allowed a reasonable period that has been mutually agreed to try and rescue the situation. Clawback is, one of the more intricate, complex and sensitive aspects of a sale. Hornblower will assist both parties throughout providing guidance to ensure that any clawback clause is fair and reasonable.