Exclusivity and break fees
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In the M&A deals that you have worked on, do you normally have Break Fees in the event of a breach of Exclusivity and if so, what would you consider as a reasonable amount for Break Fees?
Hi!
Yes, I have seen break-up fees in LoI in several transactions. I believe if the parties have good intentions to conclude the deal and are acting in good faith, it shouldn’t be a deal breaker to have such provisions in the LoI. As for the amount, it depends on the size of the transaction, industry standards and the stage of the deal. The amount of such fees can range from 1% to 5%, depending of the transaction size. If it is a small deal, then it will usually be 1-3%, while in the bigger transactions: 3-5%.
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