Internet dating cautions
Requiring a termination fee from the buyer helps level the playing field.”A typical no-shop clause will include prohibitions on directly or indirectly soliciting other competing offers, providing confidential information to other bidders and compelling the seller to advise the bidder of any other proposals.This sometimes includes the terms of the proposals and the identity of the bidder.In this case, the percentage is higher because, from the seller’s point of view, the fee needs to be high enough so that there is some pain associated with walking away.It also needs to be an adequate enough amount to compensate for the potential loss.“To address the question about the appropriate amount, I believe the amount needs to be more than a slap on the wrist,” says Rush.“If the marriage is to happen there comes a point in time where the parties need to convert from dating around to getting married, but it is not in the beginning of the relationship.”He goes on to explain, “When the commitment does happen, it needs to be on both parties.
Sellers frequently contend that in ambulatory center transactions the balance of bargaining power between the parties is skewed in favor of the buyer.
As a consequence, a savvy buyer inevitably will attempt to lock in the seller as early possible in the process justified on the basis that they will be devoting considerable financial and human resources to due diligence on the transaction.
Breakup fees and no-shop clauses serve as reasonable methods of mitigating risk.
“We have seen in the ambulatory transactions up to 10% of the transaction amount, with most of them being 0,000.”While a breakup fee establishes a clause to deter a buyer from trying to remove the sellers’ options too early and walking away for no good reason and compensating the seller, a no-shop clause is prospective in that it prevents the target from soliciting competing offers in the period between the date of signing a LOI and the closing of the deal or the expiration of the LOI.“In regards to urgent care business, ASCs and other ambulatory center business transactions in the private capital markets, early on the buyers virtually always desires a standstill agreement or a no-shop clause, which is when the buyer has an exclusivity period and the seller cannot continue to shop the business to other buyers,” said Rush.
“The buyer or investor is not signing up for monogamy, but he wants the seller to be monogamous for a period of time,” said Rush.