Push to keep M&A advisers on board Increased staff turnover in the banking sector has led to more companies pushing for so-called "key man" provisions in merger deals to ensure they are not penalised if advisers move firm. Bankers say that drastic cuts in the advisory businesses of major investment banks, as well as numerous departures of senior dealmakers, have rung alarm bells among corporate clients. A lot of banks have seen six rounds of cuts this year. This is freaking out executives," said the head of a large investment banking division. The stability of a bank's workforce has become a very important issue. There is rising demand from executives for "key man" provisions in engagement letters." Such a provision allows a company to withdraw the M&A advisory mandate if a key advisor leaves the bank. The terms of these arrangements in deals however are kept private. "We have seen more requests in recent months from companies for key man provisions in transaction engagements," said Michael Hatchard, UK corporate partner at Skadden, Arps, Slate, Meagher & Flom. Engagement letters typically include so-called "tail provisions" whereby if a company decides not to do a deal, the bank can claim fees if talks are restarted on the same deal with another adviser more than a year later. M&A advisers who have witnessed this trend say that in some cases companies had sought either to shorten the period over which these provisions can apply or the power to terminate these engagements without being liable for the full fees. "There is nothing worse than if you are in a deal for a year and the key banker goes on gardening leave," the banker said. Would-be acquirers have also been seeking to specify when appointing advisers, which bankers will be in the deal teams in case a key adviser leaves. Companies are concerned about the risk of "bait and switch," said one senior M&A adviser at a leading law firm, meaning when a bank's star bankers are sent first to win an advisory mandate but the team that ends up working on it is less experienced. One legal expert said the trend of these requests, in both the US and Europe, faces "enormous" resistance from banks. While these provisions are occurring in a minority of situations, some M&A experts predict that ongoing instability in the banking industry will continue to be an issue for companies. Banks from UBS to Credit Suisse and Nomura have made deep cuts his year in their mostly London-based advisory businesses - from M&A advice to equity capital markets - with some losing up to a third of senior dealmakers. Banks have also been faced with defections of star dealmakers such as Yoel Zaoui, who left Goldman Sachs, and Simon Robey, who will step down from his position at Morgan Stanley in January.