Breakup Fee
In a website purchase transaction, a breakup fee or termination fee is a fee paid to one party if the other party backs out of the deal. This could be a fixed fee or percentage of the sale price.
For example, the website buyer could be asked to place a fixed amount of money in escrow during the sale process. If the buyer then backs out due to no fault of the seller, this money could be compensation to the seller for the seller’s time and resources during the sale process. The same applies if the seller backs out of the deal due to no fault of the buyer. The seller may be expected to pay the buyer a sale breakup or termination fee.
Of course, this fee must be agreed to by both parties before the sale process begins.
Author: Kris Tabetando
Kris Tabetando provides mergers & acquisitions (M&A) advisory and brokerage services to Internet companies. He also partners with investors to acquire & manage Internet businesses.
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