It's not a matter of law. It's a "breakup fee" negotiated by Instagram in the event that the acquisition falls through.
The purpose of a breakup fee is to compensate the target for costs associated with the failed acquisition and various other losses or expenses. Mostly however, a breakup fee compensates the target for business oppportunities not pursued while the acquisition was being attempted because of the acquisition.
In cases where the acquirer is a direct competitor to the target, the breakup fee guarantees that the acquirer can't simply look at the target's books and assets, walk away, and use that knowledge to clone the target's business, without paying for it.
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It's not a matter of law. It's a "breakup fee" negotiated by Instagram in the event that the acquisition falls through.
The purpose of a breakup fee is to compensate the target for costs associated with the failed acquisition and various other losses or expenses. Mostly however, a breakup fee compensates the target for business oppportunities not pursued while the acquisition was being attempted because of the acquisition.
In cases where the acquirer is a direct competitor to the target, the breakup fee guarantees that the acquirer can't simply look at the target's books and assets, walk away, and use that knowledge to clone the target's business, without paying for it.
Meant to upvote, fat-finger downvoted instead. My bad. Hopefully someone can compensate.
Solid copy!