The just-released 2010 Transactions Termination Fee Study
by Houlihan Lokey (HLHZ)—which summarizes key metrics for 2008-2010 M&A transactions—shows termination fees as a percentage of transaction value ranged from 0.9% to 30.4% in 2010, with a mean of 3.5% and a median of 3.3%–slightly higher than the mean in 2008.
“Properly crafted, a termination fee provision can facilitate the sale of a company by ensuring that the bidder will receive a material ‘consolation prize’ to defray its investment—in time, out-of-pocket expense and opportunity cost—if the transaction is not consummated,” the report says. “On the other hand, termination fees protect the acquirer by effectively increasing the price that a third-party bidder will need to pay to consummate a competing transaction.”
One of the best books of deal data: BVR’s partner PitchBook has just pushed its deal count over 50,000 domestic and international transactions (representing over $6.24 trillion of invested capital) in private equity and venture capital. Also available on the PitchBook Platform: data on deal sizes, transaction multiples, investors, sellers, lenders, service providers, company financials, and more. Over 41,000 companies, 14,000 investors, 14,000 funds, 158,000 people, 6,000 service providers, and 5,000 limited partners in the PE/VC universe are included in the database.
Contact BVR’s Lexie Gross about the PitchBook Platform, or click to the PitchBook/BVR Guideline Public Company Comps Tool.
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