Series 79 practice questioneasyDeal Protections
A breakup fee is typically paid by which party in the event a merger agreement is terminated due to the acceptance of a superior proposal?
- AThe acquirer
- BThe target✓ Correct answer
- CThe financial advisor
- DThe target’s shareholders
Explanation
Why B — The target
Breakup fees are most commonly paid by the target to the acquirer if the deal is terminated due to a superior offer. This discourages frivolous third-party bids without preventing the board from fulfilling its fiduciary duties.
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