12 April 2024

This piece delves into the intricacies of break-fee clauses in M&A transactions, sparked by the failed Sony-Zee merger. The author, Kaif Anwar, elucidates the concept, global regulations, and impact of break fees, citing examples like Microsoft-LinkedIn and AT&T-T-Mobile. While Australia, the UK, and the US have varying regulations, India lacks explicit legislation, relying on contract law for private transactions and regulatory bodies like RBI and SEBI for public ones. The article advocates for clearer guidelines from authorities like the Ministry of Corporate Affairs and RBI to enhance transparency and ease of doing business in India. It emphasizes the need for a nuanced approach, suggesting a minimum percentage of the total deal value as the quantum of break fee permissible. Ultimately, it calls for regulatory clarity to navigate the complex terrain of break-fee clauses in M&A transactions effectively.