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What Is a Termination Fee? Meaning and Implications

By Lyle Daly – Mar 12, 2025 at 4:23PM

Key Points

  • Termination fees in M&A deals typically range from 1% to 3% of total value and are paid by the seller if it backs out of the deal.
  • Buyers use termination fees to deter other bidders and to protect themselves in the event a deal falls through.
  • A potential takeover can boost a company's share price but can also increase volatility.
Key findings are powered by ChatGPT and based solely off the content from this article. Findings are reviewed by our editorial team. The author and editors take ultimate responsibility for the content.

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