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Paying To Break Up: The Metamorphosis Of Reverse Termination Fees, Afra Afsharipour

Afra Afsharipour

Despite our giving lip service to the binding nature of contracts, every law student learns that there are numerous possible “outs” or “walk away rights” associated with any contract. This Article examines one particular walk away right – the reverse termination fee (RTF) – in one particular category of acquisition transactions – strategic transactions.

In sophisticated acquisitions involving public companies, the risk that one party may walk away from the transaction is particularly high because there is generally an interim period between the signing of the agreement and the completion of the acquisition. Accordingly, acquisition agreements are peppered with various …