Break-up Fee (aka Termination Fee) defined: A break-up fee (also know as a termination fee) is a common fee used in takeover agreements if the seller backs out of a deal to sell to the purchaser. A breakup fee, or termination fee, is required to compensate the prospective purchaser for the time and resources used to facilitate the deal. Breakup fees are normally 1-3% of the deal’s value.
Above is a definition for “Break-up Fee (aka Termination Fee)” from PrivCo’s Private Company Knowledge Bank, the definitive online and e-book guide to private companies and private company deals.
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