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Article Excerpt
Byline: Avram Davis
The propensity of reverse break-up fees in deal documents has climbed alongside the rise of private equity, and when acquisitions started blowing up last year, buyout shops leaned heavily on the escape clause. Traditionally, reverse breakup fees have been considered part of the LBO phenomenon, although increasingly, deal pros say, they are popping up in more transactions involving corporate buyers.
The growing prevalence in strategic deals is partially the result of the credit crunch. While financing was rarely in question for strategics in the past, today there's no guarantee that even corporate buyers can procure the necessary debt for deals. Moreover,...
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