Reverse Break Fees: From Private Equity To Mainstream

Law360, New York (May 21, 2010, 1:45 PM EDT) -- In last month’s column we discussed go-shop provisions and how that mechanism, once found exclusively in private equity deals, has now made its way into strategic buyer transactions. This month we focus on another significant deal term which has similarly migrated from private equity transactions to strategic transactions: reverse break fees.

A short history is in order. Way back in the Pleistocene era (the ‘90s), when a company was sold to a private equity bidder, the standard provision in the agreement provided that the private equity...
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