What Is a Stalking Horse Agreement?

A stalking horse agreement is a type of arrangement in which an individual approaches a company or significant person in order to test the viability of an idea. The person that approaches the prominent individual or company is working on behalf of someone that wishes to remain anonymous.

With a stalking horse agreement, an individual can "test the waters" to see if a business idea would be of interest to an important person or company. This type of arrangement allows the person that came up with the idea to remain anonymous. If the idea is of interest to the prominent person, then that person can come out and speak to them directly. If the idea does not seem interesting to the prominent individual, the person can remain anonymous.

This type of arrangement is often used when a business or individual things that the idea could potentially cause problems. This way, they can keep their anonymity if the prominent individual is turned off by they idea. The stalking horse agreement has been used by many powerful figures in order to keep their reputation intact while still trying to pursue business opportunities that have vast potential.