Do You Charge a Seller Break-Up Fee?

November 09, 2025

by an intermediary from Bentley University in Charleston, SC, USA

You spend 3 to 6 months negotiating. Endless emails, Phone calls, Site visits, Quality of earnings, Legal costs, and Soft costs. Then the seller wakes up one morning and says, “I’m out.” For those of you targeting the lower middle market, how are you protecting your time and capital? Do you implement a deal break-up fee or reverse termination fee in your LOI? Does it become a non-negotiable? If you do, what have you found to be reasonable ranges? Flat fee? Percentage of enterprise value? Reimbursement of diligence costs? Curious how the experienced searchers and independent sponsors structure this so you’re not left holding the bag after months of work.

Reply by a searcher
in Charlotte, NC, USA

I am interested to hear what others have to say here, but if I was a seller of a worthwhile business and saw that I would be charged a fee if I changed my mind selling to you... I would laugh and delete you number. Due diligence needs to happen on both sides.

Reply by an intermediary
from University of Nevada in Henderson, NV, USA

I usually introduce a break up fee when a broker tries to say the buyer needs to put down a deposit. My response is usually, then the seller should as well because if we dont get a deal done then he needs to pay me for my time as well to let me know that he is serious! To answer your question everything is negotiable, but I most of the time wouldnt have a break up fee....I would just qualify the prospect a little more and build that repor to make sure they are really motivated to sell. If you need further insight then reference the topic, and you can message me and we can discuss the topic further

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