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by thematt 2396 days ago
How common are breakup fees as part of an LOI?
2 comments

Even 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.
Extremely 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).