Should your next acquisition come with a ‘break-up fee’? [Video]
When a competitor offers to buy your company, it could be important to consider a break-up fee as part of the deal. John Warrillow wrote about this in a recent Forbes article. He said that this is part of minimizing risk.
Simply put, a break-up fee is insurance in case the buyer decides not to go through with a merger. If the buyer agrees to pay this fee going in, it may be proof of how serious they are.
A recent example of this involves NextEra Energy and Hawaiian Electric Industries. According to RTT News, the latter will receive $90 million as a break-up fee after a thwarted merger. The Hawaiian Public Utilities Commission reportedly dismissed the merger application.
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