Series 79 practice questioneasyDeal Protections
A breakup fee in an M&A agreement is best described as:
- AA fee paid to the buyer if due diligence uncovers material issues
- BA fee paid by the target to the buyer if the deal is terminated under specified circumstances✓ Correct answer
- CA bonus for management after closing
- DA regulatory penalty for gun-jumping
Explanation
Why B — A fee paid by the target to the buyer if the deal is terminated under specified circumstances
Breakup fees are paid by the target if the deal is terminated for reasons like accepting a superior bid. Other answers confuse regulatory penalties or bonuses with deal protections.
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