If you've ever tried to get out of a cell phone contract, you probably already know what a "termination fee" is -- a price you pay for stopping some periodic payment. Buying out your contract, so to speak.
In private equity, deals typically involve a hefty management fee charged by the firms to help run the company (better, we all hope, than the management team was running the company, before). This management fee usually has some timeframe; five or 10 or 15 years, perhaps. If the company is sold or taken public before the time is up, a termination fee might be charged, as much as $15 or $30 million. -- sg
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