Friday, June 4, 2010
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.