Senior staff writer
Private equity is sitting on the cusp of a comeback. Banks
are beginning to lend to them again (albeit at much lower
leverage) and there are quite a few targets keen to sell. But
all is not well. Reverse break-up fees have started to rise
and, more worryingly, specific performance clauses are becoming
increasingly common. Private equity can try to pass the risk
onto the banks, but they are not in the best negotiating
As a result, private equity firms are getting stung from
both sides. They need to be committed to their decisions to
invest and open to negotiation on terms. Standard-form
transactions are dead and so is the flippant attitude of using
reverse break fees as an option to buy.
Strategics led the way Historically, reverse break fees were
pegged to the forward fee of around 3%. But forward and reverse
fees are designed...