A tail provision is a clause in an M&A advisor engagement letter that requires the seller to pay the success fee if they sell to any party introduced by the advisor (or that contacted the advisor during the mandate) within a defined period after termination. Australian tail provisions typically run 18 to 24 months.
Sellers should negotiate tails down to 12 months and limit the application to a written list of named parties, rather than agreeing to broad tails that capture sales to any party regardless of advisor introduction.