Reverse Break-up Fees in Strategic M&A Transactions

This article analyzes: 1) the pros and cons of an RTF tied to a breach by a buyer or the inability of a buyer to secure financing; 2) whether RTFs are truly enforceable by a target seller; and 3) what all this means in terms of target and buyer board members' fiduciary obligations.

23 minute read November 02, 2015 at 12:00 AM
By
Uri Litvak
Reverse Break-up Fees in Strategic M&A Transactions

Reverse break-up fees, also known as reverse termination fees (RTFs), became more widely adopted as deal risk allocation mechanisms in the M&A context as part of the wave of contractual innovation that took place in the aftermath of the last financial crisis.

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