Breakup fee. What formula do you use?

by a searcher

5 years ago

We know that many times Searchers would encounter Sellers that waste a lot of time (your time). What formula do you use to come up with a value for your breakup fee to the Seller to prevent such a situation and to allow for you to recoup you cost to accountants, lawyers etc? 

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10 comments

searcher

I like this clause. This may work well in conjunction with the breakup clause. My view is that as with anything else one has to mitigate their risk and would indicate to the Seller in the LOI that you mean business. (So don't even sign it if you're not committed to going all the way).

5 years ago | like reply | 0 likes

searcher from Babson College - F.W. Olin Graduate School

You may want to consider a GAAP clause related to the misrepresentation of data: revenue or earnings. If diligence shows numbers are off and the seller isn't willing to adjust pricing, you may be stuck with no deal and all the fees.

5 years ago | like reply | 0 likes

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