M & A Law Prof Blog

Editor: Brian JM Quinn
Boston College Law School

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Friday, June 4, 2010

Australians Hate Termination Fees

Apparently, Australians hate termination fees.  That's the word at least from an Australian research firm.  

More than 60 per cent [of respondents] said their companies should not agree to either break fees with an acquirer or success-based fees for investment bank advisers who are retained to help in the negotiations.  ''Success'' in this context can mean an adviser helping a company fend off an unwanted takeover.
Now remember that the Australian Takeovers Panel generally limits termination fees in merger agreements to no more than 1% of transaction value, so termination fees are already pretty small when compared to Delaware's more generous levels.  

I suppose it's all in the way you ask the question.  The survey asked if respondents approved of "break fees, or financial penalties." If someone asked me that, I probably say no, too.  If they asked, on the other hand, if I approved of "break fees to compensate bidders for their search costs in the event the target walked away to take a better deal" I'd say yes.  

-bjmq


http://lawprofessors.typepad.com/mergers/2010/06/australians-hate-termination-fees.html

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