5 ms·
How common are breakup fees as part of an LOI?
by thematt 7y ago
How common are breakup fees as part of an LOI?
- einarvollset 7y agoExtremely rare at the kind of enterprise value I see ($5-50m mostly). From what I hear also extremely hard to enforce (clause is usually very vague).
- jalonso510 7y agoEven in deals where there is a breakup fee, it's not a part of the LOI. It would be negotiated as a part of the Merger Agreement or Asset Purchase Agreement, to cover what happens if the deal signs, but then one party breaks off before moving to closing. The LOI is always non-binding so there's no firm commitment to do the deal at that phase and no penalty for breaking up.