AD Article
Comparative Analysis of Termination Fees / Break-Up Fees in M&A Transactions in France and the United States
The attempted acquisition of Warner Bros. Discovery by Netflix, challenged by Paramount Skydance, provides a striking illustration of the strategic role played by break-up fees in large-scale M&A transactions, particularly in the United States. The unprecedented level of termination fees agreed in the Netflix–WBD merger agreement highlights a well-established U.S. market practice in which break-up fees and reverse break-up fees function as key tools for allocating deal risk, especially regulatory and antitrust risk. This article offers a comparative perspective on the operation of these mechanisms under U.S. and French law. While break-up fees are routinely used and closely supervised by U.S. courts—most notably in Delaware—French practice remains far more cautious. In France, termination fees are less frequent and subject to strict legal constraints stemming from civil law principles, securities regulation, and labor law considerations. Particular attention is paid to proportionality, consistency with corporate interest, and the preservation of free competition between competing offers.