Richards Layton & Finger

Lessons from the Meltdown: Reverse Termination Fees

November 2008

As the economy travels its roller-coaster path, deal lawyers are constantly in danger of drafting merger provisions that deal with yesterday’s problems. During the frothy “up” market that developed after the Internet bubble burst in 2000, deal lawyers paid relatively little attention to remedies provisions. Relatively few deals fell through in the go-go days of 2005 and 2006, so there were few chances for the courts to test these provisions or the processes that led to them. This changed dramatically when the market collapsed, beginning in mid-2007.