Deal Breakup Fee - Does Anyone Have Experience?

by a searcher from University of Liverpool

2 months ago

I submitted an LOI for a deal, the sellers have indicated that they would like to move forward with me as the preferred buyer, however the broker has previously had some negative experiences with searchers and as a result wants to put in a breakup fee of $100k in the LOI, in the event that I am unable to obtain the funding for the deal.

Has anyone experienced this situation before, and if so, what advice would you give me?

Thanks

David

1 like
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48 comments

searcher from Washington University in St. Louis

I am strictly against break-up fee. I would suggest being upfront with the broker. You can give them some proof of funds or a bank letter. You can say you would incur due diligence costs, and you would not be entertaining any such break-up fee.

1 month ago | like reply | 0 likes

searcher

Hi David, I’ve been in a similar situation where I was proposed such clause to “ease” the seller, however I didn’t accept it, if you were able to convey a strong positive impression to the seller then he will take a chance for a limited time on you for the LoI, so the options could be Exclusive LoI for 14 days, renewable and with weekly check ins or non-Exclusive

2 months ago | like reply | 1 like

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