Control Premium
What is Control Premium? Control premium refers to an amount that a buyer is willing to pay in excess of the fair market value of shares in order to gain a controlling ownership interest in a publicly traded company. A buyer who pays a control premium gains access to the firm’s cash flows, day-to-day operations,...
Non-Binding Offer
What is a Non-Binding Offer? A non-binding offer, also referred to as an indicative offer, is used in a sales process to establish the terms of a deal between the seller and the buyer. It serves as an “agreement to agree” between the two parties. Through the document, the buyer expresses an interest to acquire...
Takeover Premium
What is Takeover Premium? Takeover premium is the difference between the market price (or estimated value) of a company and the actual price paid to acquire it, expressed as a percentage. The premium represents the additional value of owning 100% of a company in a merger or acquisition and is also known as the control premium. The...
Breakup Fee
What is a Breakup Fee? A Breakup Fee, also referred to as a termination fee, is a penalty that is paid in mergers and acquisitions transactions if the seller backs out of the deal. The fee serves to compensate the purchaser for the time and resources spent in negotiating the deal. Buyers ask for a...
No Shop Provision
What is the No Shop Provision? A No Shop Provision is a clause included in an agreement between the seller and the buyer that prevents the seller from soliciting purchase proposals from other parties for a given duration of time. In essence, the provision limits the seller from seeking other potential buyers of the business...
