Break-up fees — picking your number
During the course of negotiations of every public company deal, inevitably the conversation will turn to the amount of the break-up fee payable by a target company to a buyer if the deal is terminated under certain circumstances. Because US corporate law generally requires a target company to retain the ability to consider post-signing superior proposals, a break-up fee is an important element of the suite of deal-protection devices (including ‘no-shop’ restrictions, matching rights and so on) that an initial buyer implements to seek to protect its position as the favored suitor.
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When a firm shouts loudly about a landmark merger, as SJ Berwin did when it joined forces with King & Wood Mallesons, departures are always likely to come under the spotlight.