Lawyers split over breakup fees in China-U.S. M&A
中美并购：律师对终止费存分歧
May 11, 2016 | BY
Katherine JoThe significance of reverse breakup fees has gathered global attention amid increases in Chinese outbound investment and perceived regulatory and commercial risks. 随着中国对外投资增长以及所预见的监管和商业风险，反向终止费的重要性受到全球关注。
While Chinese companies continue to be on the lookout for prime target assets beyond their borders, regulatory approvals and capital outflow restrictions can shroud the successful execution of a deal. These risks often form the crux of negotiations between PRC buyers and foreign sellers, each wanting their own peace of mind for in case a transaction falls through.
Reverse breakup fees, or termination fees, compensate for the risk of non-closure. Failure to win PRC outbound regulatory approval is a big one from the Chinese buyers' side, but the Committee on Foreign Investment in the United States (CFIUS), which reviews inbound deals perceived to involve a national security element, is the bigger concern for Chinese and U.S. M&A parties.
The most recent CFIUS annual report, published on February 19 this year, found that since 2009, there has been an over 200% increase in the number of filings. Sectors that rose in 2014 include technology, semiconductor and electronic component manufacturing, professional, scientific and technical services and software publishing.
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