M & A Law Prof Blog

Editor: Brian JM Quinn
Boston College Law School

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.  



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