What document is required to indemnify against deal liability in the external process?

The engagement letter is a critical document in the context of indemnifying against deal liability in the external process. This document outlines the terms of the relationship between the parties involved in the transaction, including the scope of work, fees, and responsibilities. More importantly, it typically includes clauses that address liability and indemnification. Specifically, these clauses protect the advising party from certain liabilities that may arise from their role in the transaction.

By establishing clear expectations and responsibilities, the engagement letter serves as a legal safeguard, detailing how the parties will handle various risks associated with the deal. This inclusion is essential as it ensures that any potential liabilities are managed upfront, thereby providing a layer of protection for the advising party.

The other documents, while important in various aspects of the deal process, do not typically focus on indemnification against deal liabilities. A Confidential Information Memo is primarily used to disclose essential information about the company and its operations. The Term Sheet outlines the principal terms of the deal but does not serve to protect against liabilities specifically. The Security Agreement relates to collateral for debt but does not address indemnification in the transaction process. Therefore, the engagement letter is the key document that effectively addresses indemnification and liability concerns in external transactions.