
M&A Issues: Breakup Fees - Straubiz
http://www.avc.com/a_vc/2011/02/ma-issues-breakup-fees.html
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boucher
There's a fairly practical reason to ask for a breakup fee in a smaller
acquisition (or even VC round): the legal costs of these events are
significant for a small company. Generating Series A paperwork, or acquisition
paperwork, could easily run 20-30k. That may not be a lot to a company
generating millions in revenue, but to a small company just graduating Y
Combinator (as an example), it could be a substantial amount of the money on
hand.

