What You Need To Know
- As antitrust regulators more aggressively wade into M&A
transactions, breakup fees have become a valuable tool for
allocating risk.
- Most common in deals valued at $1 billion or more, the fees
typically range 4–7% of the deal value and are part of a
larger package of other antitrust risk-shifting provisions. They
can also be tiered, with certain fees triggered under specified
circumstances.
- The arrangements are particularly popular in the life
sciences—more than one-third of deals with antitrust breakup
fees last year came from the sector.
Looking back at 2023 mergers and acquisitions (M&A)
activity, antitrust-related breakup fees continued to be an
important tool in allocating antitrust risk between deal parties.
These typically take the form of a “reverse”
termination fee payment from the buyer to the seller, payable upon
the deal being abandoned due to the failure to obtain all required
antitrust clearances. In 2023, there were at
