PRIVILEGED AND CONFIDENTIAL ATTORNEY WORK PRODUCT
CALDERWOOD & HARKNESS LLP 599 Lexington Avenue New York, New York 10022
January 6, 2024
INTERNAL MEMORANDUM
TO: Harrison Wexford, Partner, Calderwood & Harkness LLP Beatrice Holloway, Partner, Calderwood & Harkness LLP
FROM: Tiffany Rosenthal, Associate, Calderwood & Harkness LLP
RE: Termination Fee and Reverse Termination Fee Analysis — Acquisition of Cloudium Technologies plc by Solara Digital Infrastructure Fund VI LP
Matter No.: 1041-00003
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I. Executive Summary
The purpose of this memorandum is to analyze and benchmark the termination fee and reverse termination fee negotiated in the draft Agreement and Plan of Merger (the "Merger Agreement") among Cloudium Technologies plc ("Cloudium" or the "Company"), Stratos Merger Sub Inc. ("Merger Sub"), and Solara Digital Infrastructure Fund VI LP ("Fund VI" or "Solara"). This analysis is prepared in advance of the final negotiation session scheduled for January 15, 2024, and is intended to equip the deal team with a comprehensive assessment of the defensibility, market positioning, and risk profile of the key economic break-fee provisions.
Transaction Overview. The proposed transaction is structured as a reverse triangular merger in which Merger Sub, a Delaware corporation and wholly owned subsidiary of Fund VI, will merge with and into Cloudium, with Cloudium surviving the merger as a wholly owned subsidiary of Fund VI. The aggregate deal value is approximately $6,800,000,000 based on merger consideration of approximately $36.92 per share and 184,200,000 shares of Cloudium common stock outstanding. Cloudium is a public limited company incorporated under the laws of England and Wales and listed on the Nasdaq Global Select Market under the ticker symbol "CLDM." The parties anticipate signing the Merger Agreement on January 22, 2024.
Key Economic Terms Under Analysis. The following break-fee provisions are the subject of this memorandum:
• Termination Fee (payable by Cloudium): $221,000,000, representing 3.25% of the $6,800,000,000 aggregate deal value.
• Reverse Termination Fee (payable by Solara/Fund VI): $374,000,000, representing 5.5% of the aggregate deal value.
• Limited Guarantee (from Solara Fund VI GP LLC): $246,000,000, consisting of $221,000,000 (equal to the termination fee amount) plus $25,000,000 designated for enforcement costs.
Conclusion. Based on the analysis set forth in this memorandum, both the termination fee and the reverse termination fee fall within defensible ranges under Delaware law precedent and are consistent with market practice for transactions of this size and type. The asymmetry between the 3.25% termination fee and the 5.5% reverse termination fee is justified by the transaction's leveraged financing structure and the regulatory risk profile inherent in a cross-border acquisition of this nature. The limited guarantee structure is market-standard for private equity-sponsored take-private transactions and provides Cloudium with credit-worthy recourse without exposing the full fund or its limited partners to direct liability beyond customary levels. We recommend maintaining the current positions on both fees at the January 15 negotiation session.
II. Transaction Background
Parties
Solara Digital Infrastructure LP is a Delaware limited partnership and one of the preeminent private equity sponsors focused on digital infrastructure and enterprise software investments. The firm manages approximately $38 billion in assets under management across multiple fund vintages. The investing entity for this transaction is Solara Digital Infrastructure Fund VI LP ("Fund VI"), a vintage 2022 fund with approximately $12.4 billion in total committed capital. Fund VI is managed by its general partner, Solara Fund VI GP LLC, a Delaware limited liability company. The managing partners of the Solara platform are Marcus Elliston and Priya Narasimhan, who have been briefed on and approved the key economic terms of this transaction, including the guarantee exposure discussed herein.
Cloudium Technologies plc is a public limited company incorporated under the laws of England and Wales with its principal executive offices in London, United Kingdom. Cloudium is listed on the Nasdaq Global Select Market under the ticker symbol "CLDM." Cloudium's business consists of cloud-native enterprise resource planning ("ERP"), customer relationship management ("CRM"), and business-intelligence software-as-a-service ("SaaS") solutions. For the fiscal year ended September 30, 2023, Cloudium reported last-twelve-months ("LTM") revenue of approximately $1,620,000,000 and LTM EBITDA of approximately $405,000,000. As of December 31, 2023, Cloudium reported annual recurring revenue ("ARR") of approximately $1,740,000,000. The Company employs approximately 6,800 individuals globally, with operations in the United States, the United Kingdom, India, and Germany. The board of directors of Cloudium is chaired by Douglas Pemberton, an independent director.
Transaction Structure
The transaction is structured as a reverse triangular merger under the Delaware General Corporation Law (the "DGCL"). Stratos Merger Sub Inc. ("Merger Sub") is a Delaware corporation incorporated on January 8, 2024, the sole stockholder of which is Fund VI. At the effective time of the merger, Merger Sub will merge with and into Cloudium, with Cloudium surviving the merger as a wholly owned subsidiary of Fund VI. The per-share merger consideration is approximately $36.92, payable in cash to all holders of Cloudium common stock (other than holders of rollover equity). With 184,200,000 shares of Cloudium common stock outstanding, the aggregate equity value is $6,800,000,000. Based on the LTM EBITDA of $405,000,000, the implied EV/EBITDA multiple is approximately 16.8x.
Financing
The total funding requirement for the transaction, inclusive of the merger consideration, the refinancing of existing Cloudium indebtedness, and estimated transaction costs, is approximately $7,188,944,048. The financing is structured as follows:
• Debt Financing: Meridian Atlantic Bank, N.A. (as lead arranger and administrative agent) and Ironclad Capital Markets LLC (as co-arranger) have committed to provide a $3,740,000,000 Term Loan B facility and a $500,000,000 Revolving Credit Facility, for total committed debt financing of $4,240,000,000. The debt commitment letter (the "Debt Commitment Letter") is subject to SunGard-limited conditionality, meaning that the conditions to the debt funding substantially mirror the conditions to the closing of the merger, as further discussed in Section IV.D below.
• Equity Financing: Fund VI has committed to contribute $2,832,888,096 in equity (the "Equity Commitment"). A portion of this equity commitment — specifically, $425,000,000 — will be funded through Solara Digital Co-Invest VI-A LP, a co-investment vehicle formed for this transaction.
• Rollover Equity: Two existing Cloudium stakeholders will contribute rollover equity totaling approximately $616,055,952. Jonathan Hargrove, Cloudium's co-founder and a 4.2% shareholder, will roll 50% of his equity stake (approximately $142,814,544). Pinnacle Growth Ventures LLC, an 11.6% shareholder, will roll 60% of its equity stake (approximately $473,241,408).
• Refinancing of Existing Indebtedness: Cloudium's existing indebtedness of approximately $820,000,000 — consisting of a $620,000,000 term loan and a $200,000,000 revolving credit facility under a credit agreement dated March 15, 2021, with Atlas Commercial Lending Corp. — will be repaid in full at closing.
Key Deal Terms and Timeline
The Merger Agreement includes a no-shop provision effective from signing, subject to a fiduciary-out exception permitting the Cloudium board to engage with unsolicited Superior Proposals under specified conditions. The Outside Date for the transaction is June 30, 2024. Regulatory approvals required for closing include clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), from the Federal Trade Commission and the Department of Justice, as well as a Phase 1 merger notification and clearance from the United Kingdom's Competition and Markets Authority (the "CMA").
Advisors
• Buyer's Counsel: Calderwood & Harkness LLP (this firm).
• Target's Counsel: Ridgeway Phelps & Sato LLP (Catherine Answorth, lead M&A partner, New York; Alistair Fenn, lead corporate partner, London).
• Buyer's Financial Advisor: Osprey Bancroft & Co. (Damien Harlow, Managing Director).
• Target's Financial Advisor: Veridian Partners LLC (Monica Pressler, Managing Director). Veridian Partners is expected to deliver a fairness opinion to the Cloudium board on or about January 21, 2024.
III. Termination Fee Analysis
A. Summary of Termination Fee Provisions
Under Section 8.03(a) of the draft Merger Agreement, Cloudium is obligated to pay Fund VI a termination fee of $221,000,000 (the "Termination Fee"), representing 3.25% of the $6,800,000,000 aggregate deal value. The Termination Fee is payable upon the occurrence of any of the following triggering events:
(i) Superior Proposal Termination. Cloudium's board of directors exercises its fiduciary out and terminates the Merger Agreement in order to enter into a definitive agreement with respect to a Superior Proposal (as defined in Section 6.05(d) of the Merger Agreement).
(ii) Adverse Recommendation Change Termination. Solara terminates the Merger Agreement following an Adverse Recommendation Change by the Cloudium board, including any withdrawal, modification, or qualification of the Cloudium board's recommendation to its stockholders in favor of the merger, or any failure to reaffirm such recommendation within ten (10) business days of a written request by Solara following public announcement of a competing Acquisition Proposal.
(iii) Tail Provision Termination. Termination by either party following the Outside Date (June 30, 2024) or the failure to obtain the requisite stockholder approval at the Cloudium stockholder meeting, provided that (a) a competing Acquisition Proposal has been publicly announced or otherwise made known to the Cloudium board prior to such termination and has not been withdrawn at the time of termination, and (b) within twelve (12) months of such termination, Cloudium enters into a definitive agreement with respect to, or consummates, such Acquisition Proposal (or any other Acquisition Proposal). For purposes of the tail provision, the definition of "Acquisition Proposal" is modified so that references to 20% are replaced with references to 50%.
Pursuant to Section 8.03(c), upon payment of the Termination Fee, such payment constitutes Solara's sole and exclusive remedy against Cloudium and its affiliates with respect to the applicable termination scenario. This exclusive remedy limitation does not apply in cases of fraud or willful breach by Cloudium, in which event Solara retains all remedies available at law or in equity.
B. Benchmarking Against Market Precedent
The 3.25% Termination Fee is well within the range observed in public company mergers and acquisitions and, more specifically, in large-cap technology and software take-private transactions.
General Market Data. According to recent deal studies published in 2022 and 2023, the standard range for termination fees in public company M&A transactions is 2.0% to 4.5% of equity value. For transactions with deal values exceeding $5 billion, the median termination fee falls in the 2.5% to 3.5% range. The somewhat compressed range in larger transactions reflects a practical recognition that, at higher absolute dollar amounts, even lower percentages represent substantial sums that provide meaningful deal protection and adequate compensation for break costs.
Comparable Technology/Software Take-Private Transactions. We have surveyed recent comparable transactions in the technology and software sector involving private equity sponsors, with deal values ranging from approximately $4 billion to $15 billion. The key comparables are summarized below and in greater detail in Appendix A:
• Alterra Software Inc. / Veltrano Capital Partners (2023). Veltrano Capital Partners acquired Alterra Software, a cloud-based supply chain management platform, in an $8.2 billion take-private transaction. The termination fee was set at 3.0% of equity value, or approximately $246,000,000.
• Nexagen Cloud Holdings / Marlowe Asset Management Digital Partners (2022). Marlowe Asset Management Digital Partners acquired Nexagen Cloud Holdings, a multi-cloud orchestration and DevOps SaaS provider, in a $5.5 billion take-private transaction. The termination fee was 3.25% of equity value, or approximately $178,750,000.
• Quorum Data Systems Ltd. / Ironwood Technology Fund (2023). Ironwood Technology Fund acquired Quorum Data Systems, a data analytics and enterprise AI platform, in an $11.3 billion take-private transaction. The termination fee was 2.8% of equity value, or approximately $316,400,000.
• Cerulean Networks Inc. / Apex Digital Equity Fund (2022). Apex Digital Equity Fund acquired Cerulean Networks, a cybersecurity and network monitoring SaaS provider, in a $6.1 billion take-private transaction. The termination fee was 3.0% of equity value, or approximately $183,000,000.
• Strataform Analytics Corp. / Helix Infrastructure Partners (2023). Helix Infrastructure Partners acquired Strataform Analytics, a business-intelligence and predictive analytics platform, in a $9.7 billion take-private transaction. The termination fee was 3.1% of equity value, or approximately $300,700,000.
The median termination fee across these five comparables is approximately 3.0% of equity value. The 3.25% Termination Fee in the Cloudium transaction sits at the midpoint-to-upper portion of this range, which is appropriate in light of several transaction-specific factors:
(i) Competitive Process and Exclusivity. Solara was granted exclusivity after submitting the highest bid in a limited sale process conducted by Veridian Partners on behalf of Cloudium. Having competed successfully for the opportunity, Solara reasonably requires adequate deal protection to compensate for the risk of being used as a stalking horse.
(ii) No-Shop Construct with Fiduciary Out. The Merger Agreement includes a no-shop provision that prohibits Cloudium from actively soliciting competing offers, but the fiduciary out permits the board to engage with unsolicited Superior Proposals. A somewhat higher termination fee is customary in transactions featuring a no-shop with fiduciary out, as compared to transactions with a go-shop provision, because the no-shop imposes greater constraints on the target's ability to explore alternatives.
(iii) Transaction Size. At $6.8 billion, the transaction falls in the large-cap category where termination fees at or slightly above 3.0% are common. The absolute dollar amount of $221,000,000 is substantial and provides meaningful compensation for Solara's break costs.
Proportionality to Break Costs. The Termination Fee is proportionate to the break costs that Solara would incur if the transaction is terminated. These costs include, but are not limited to: (a) legal fees incurred by Calderwood & Harkness LLP and Solara's in-house legal team, estimated at approximately $12,000,000 to $15,000,000; (b) financial advisory fees payable to Osprey Bancroft & Co., including commitment and milestone fees; (c) due diligence costs, including fees for technical, accounting, and industry consultants; (d) financing commitment fees, including arrangement fees, structuring fees, and the ticking fee on the undrawn Term Loan B commitment; and (e) the substantial management time invested by Solara's deal team, including the time of Marcus Elliston, Priya Narasimhan, and their respective teams. While these costs in aggregate would not reach $221,000,000, the Termination Fee also serves as a proxy for the opportunity cost of pursuing and winning this deal over alternative deployment opportunities for Fund VI's capital.
C. Enforceability Under Delaware Law
Governing Legal Framework. Although Cloudium is incorporated under the laws of England and Wales, the Merger Agreement provides that the merger will be consummated pursuant to the DGCL, and the Merger Agreement is governed by, and construed in accordance with, the laws of the State of Delaware. Accordingly, the enforceability of the Termination Fee is properly analyzed under Delaware fiduciary duty standards. Delaware courts have long recognized that the analysis of termination fees in mergers governed by the DGCL is conducted under Delaware law, regardless of the target's jurisdiction of incorporation, when the parties have chosen Delaware law to govern the transaction agreement.
Delaware Case Law. Delaware law provides a well-developed framework for evaluating termination fees in the context of corporate acquisitions:
• In re Dollar Thrifty Shareholder Litigation, C.A. No. 5458-VCS (Del. Ch. 2010): The Court of Chancery articulated the standard that a termination fee must not be "preclusive" or "coercive." A fee is preclusive if it is so large that it effectively prevents any competing bidder from making a topping offer. A fee is coercive if it has the practical effect of forcing stockholders to accept the transaction rather than face the consequences of the fee being triggered. The court applied enhanced scrutiny to the board's agreement to the termination fee as part of its overall review of the deal protection measures.
• In re Cogent, Inc. Shareholder Litigation, C.A. No. 5780-VCP (Del. Ch. 2010): The Court of Chancery upheld a termination fee in the 3% to 4% range, finding that fees in this range are generally reasonable and do not foreclose competing bids. The court emphasized that termination fees must be evaluated in the context of the overall deal protection package, including any matching rights, information rights, and no-shop or go-shop provisions.
Under the enhanced scrutiny standard applicable in Revlon and Unocal contexts, the Cloudium board's agreement to the Termination Fee will be evaluated based on whether the board acted reasonably in approving the fee as part of a deal protection package that does not unreasonably foreclose competing bidders or impair the board's ability to fulfill its fiduciary duties.
Application to the Cloudium Transaction. The $221,000,000 Termination Fee, representing 3.25% of the $6.8 billion deal value, is well within the range of fees regularly upheld by the Delaware Court of Chancery. A genuinely interested topping bidder — one willing to pay a premium above $36.92 per share — would not be deterred by a 3.25% termination fee, as the fee would represent a small fraction of any incremental premium necessary to constitute a Superior Proposal. For example, a topping bid at $38.50 per share (a 4.3% premium to the Solara offer) would generate approximately $291,060,000 in additional aggregate consideration for Cloudium stockholders, well in excess of the $221,000,000 Termination Fee.
Further supporting the enforceability of the Termination Fee, the Cloudium board was advised by experienced legal counsel (Ridgeway Phelps & Sato LLP, under the direction of Catherine Answorth and Alistair Fenn) and received financial advice from Veridian Partners LLC, which is expected to deliver a fairness opinion confirming the fairness of the merger consideration to Cloudium stockholders. The involvement of independent advisors, the arm's-length nature of the negotiations, and the independent composition of the Cloudium board under Douglas Pemberton's chairmanship all support a finding that the Termination Fee was the product of a well-informed, good-faith negotiation process.
D. Negotiation History
The Termination Fee was the subject of active negotiation between the parties' respective counsel throughout December 2023. The negotiation progressed as follows:
• Target's Initial Position. Ridgeway Phelps & Sato LLP, on behalf of Cloudium, initially proposed a termination fee of 2.5% of equity value, or $170,000,000. This reflected the target's preference for minimizing the impediment to competing bids and preserving maximum flexibility for the Cloudium board.
• Buyer's Counter. Calderwood & Harkness LLP, on behalf of Solara, countered at 3.5% of equity value, or $238,000,000, citing the competitive process, Solara's substantial investment in due diligence and financing arrangements, and the no-shop provision.
• Final Agreement. Through iterative mark-ups and telephonic negotiations in mid-to-late December 2023, the parties converged on 3.25% of equity value, or $221,000,000. Target's counsel accepted the 3.25% figure in exchange for two concessions from Solara: (i) broader fiduciary-out language permitting the Cloudium board to terminate the Merger Agreement to accept a Superior Proposal (as opposed to Solara's initial draft, which required the board to provide Solara with a right to match before termination could be effective), and (ii) a 12-month tail provision (compared to Solara's initial request for an 18-month tail period).
The resulting 3.25% Termination Fee reflects an arm's-length compromise appropriate for a transaction of this profile and size. The negotiation history is well-documented in the correspondence files and will serve as evidence of the reasonableness of the fee if challenged.
IV. Reverse Termination Fee Analysis
A. Summary of Reverse Termination Fee Provisions
Under Section 8.03(b) of the draft Merger Agreement, Fund VI is obligated to pay Cloudium a reverse termination fee of $374,000,000 (the "Reverse Termination Fee" or "RTF"), representing 5.5% of the $6,800,000,000 aggregate deal value. The Reverse Termination Fee is payable upon the occurrence of any of the following triggering events:
(i) Buyer Breach Termination. Cloudium terminates the Merger Agreement because of a breach by Solara or Merger Sub of any representation, warranty, or covenant contained in the Merger Agreement, which breach (a) has not been cured within thirty (30) calendar days following written notice from Cloudium to Solara, and (b) would result in a failure of the conditions to Cloudium's obligation to consummate the merger set forth in Section 7.02 of the Merger Agreement.
(ii) Financing Failure Termination. Cloudium terminates the Merger Agreement due to the failure of the debt financing to be consummated and Solara's related failure to close the merger by the Outside Date, provided that all conditions to Cloudium's obligation to close (other than conditions that by their terms are to be satisfied at closing) have been satisfied or waived.
(iii) Outside Date Termination — Buyer Failure. Either party terminates the Merger Agreement following the Outside Date (June 30, 2024) where (a) all conditions to Cloudium's obligation to close have been satisfied or waived, (b) Solara has failed to consummate the merger, and (c) such failure is not attributable to a breach by Cloudium of any of its obligations under the Merger Agreement.
Pursuant to Section 8.03(c), upon payment of the Reverse Termination Fee, such payment constitutes Cloudium's sole and exclusive remedy against Solara, Fund VI, Merger Sub, and their respective affiliates with respect to the applicable termination scenario, subject to the carveouts for fraud and willful breach. If Solara or its affiliates commit fraud or engage in willful breach, Cloudium retains the right to seek damages beyond the Reverse Termination Fee.
Specific Performance. Importantly, Section 9.10 of the Merger Agreement grants Cloudium the right to seek specific performance to compel Solara to enforce its rights under the Debt Commitment Letter and the Equity Commitment Letter, including by causing Fund VI to fund the Equity Commitment and by taking all actions required to cause the debt financing sources to fund the debt commitments in accordance with the Debt Commitment Letter. If specific performance is granted and the financing is funded such that the merger closes, the Reverse Termination Fee is not payable — Cloudium receives the benefit of the closed transaction rather than a break payment. The specific performance remedy and the Reverse Termination Fee are alternative, not cumulative, remedies.
B. Benchmarking Against Market Precedent
General Market Data. In private equity-sponsored take-private transactions, reverse termination fees have become a standard feature of the deal protection architecture. The standard range for reverse termination fees in PE take-privates is 4.0% to 7.0% of equity value. For large-cap leveraged buyouts — those with aggregate deal values exceeding $5 billion — the median reverse termination fee falls in the 5.0% to 6.5% range. The reverse termination fee compensates the target for the risk that the buyer will be unable or unwilling to close, particularly where the buyer's obligation to consummate the transaction depends on the availability of committed debt financing.
Asymmetry Between TF and RTF. A hallmark of the PE take-private deal structure is the intentional asymmetry between the target's termination fee and the buyer's reverse termination fee. The RTF is typically 1.5x to 2.0x the termination fee. This asymmetry reflects the qualitative difference between the two fees: the termination fee compensates the buyer for its out-of-pocket costs and the opportunity cost of a broken deal, whereas the reverse termination fee compensates the target for the substantially greater harm it faces if the buyer fails to close — including the loss of the deal premium, reputational damage, potential stock price decline, employee and customer disruption, and the cost of re-engaging in a sale process or continuing as a standalone entity.
In the Cloudium transaction, the ratio of the RTF to the TF is:
5.5% ÷ 3.25% = approximately 1.69x
This ratio falls squarely within the standard 1.5x to 2.0x band and is fully consistent with market practice.
Comparable PE Take-Private Transactions. The following comparable transactions illustrate the prevailing market norms for reverse termination fees:
• Alterra Software Inc. / Veltrano Capital Partners (2023). RTF was 5.0% of the $8.2 billion equity value, or $410,000,000, compared to a 3.0% termination fee of $246,000,000. The RTF/TF ratio was approximately 1.67x.
• Nexagen Cloud Holdings / Marlowe Asset Management Digital Partners (2022). RTF was 6.0% of the $5.5 billion equity value, or $330,000,000, compared to a 3.25% termination fee of $178,750,000. The RTF/TF ratio was approximately 1.85x.
• Quorum Data Systems Ltd. / Ironwood Technology Fund (2023). RTF was 5.5% of the $11.3 billion equity value, or $621,500,000, compared to a 2.8% termination fee of $316,400,000. The RTF/TF ratio was approximately 1.96x.
• Cerulean Networks Inc. / Apex Digital Equity Fund (2022). RTF was 5.25% of the $6.1 billion equity value, or $320,250,000, compared to a 3.0% termination fee of $183,000,000. The RTF/TF ratio was approximately 1.75x.
• Strataform Analytics Corp. / Helix Infrastructure Partners (2023). RTF was 5.75% of the $9.7 billion equity value, or $557,750,000, compared to a 3.1% termination fee of $300,700,000. The RTF/TF ratio was approximately 1.85x.
The median RTF across these comparables is approximately 5.5%, and the median RTF/TF ratio is approximately 1.85x. The 5.5% RTF in the Cloudium transaction is precisely at the median and reflects the significant leveraged financing component ($4,240,000,000 in committed debt) that exposes Cloudium to financing risk during the period between signing and closing.
C. Enforceability Under Delaware Law
Governing Legal Standard. Delaware courts have consistently upheld reverse termination fees in the 4% to 7% range as enforceable liquidated damages provisions in private equity take-private transactions. The enforceability analysis centers on whether the RTF represents a "reasonable estimate of damages" that would be suffered by the target if the buyer fails to close, as measured at the time of contracting. The RTF need not correspond precisely to the actual damages ultimately suffered; rather, it must reflect a good-faith effort to approximate potential harm at a time when actual damages are difficult to calculate with precision.
Reasonableness Analysis. The $374,000,000 Reverse Termination Fee is a reasonable estimate of the damages that Cloudium would suffer if Solara fails to close the merger. The categories of potential harm include:
(i) Loss of Deal Premium. The $36.92 per-share merger consideration represents a significant premium to Cloudium's unaffected trading price. If the merger fails to close, Cloudium stockholders would lose the benefit of this premium, and Cloudium's stock price would likely decline materially — potentially below its pre-announcement level — as the market reassesses the Company's standalone prospects.
(ii) Reputational Harm and Market Uncertainty. A failed take-private transaction creates substantial reputational harm for the target, as the market may perceive the Company as "damaged goods" — a company that was unable to complete a transformative transaction. This perception can depress the stock price, reduce investor confidence, and impair the Company's ability to raise capital or pursue strategic alternatives.
(iii) Employee Attrition and Customer Churn. The extended interim period between signing and a potential failed closing creates uncertainty for Cloudium's approximately 6,800 employees, many of whom are critical engineering and sales personnel in a competitive talent market. Key employees may depart for competitors, and customers may defer purchasing decisions or shift to alternative vendors, eroding Cloudium's ARR base.
(iv) Cost of Restarting a Sale Process. If the merger fails, Cloudium would face the significant expense and distraction of either restarting a sale process or repositioning itself as a standalone public company. Advisory, legal, and other transaction costs for a new process could be substantial, and there is no assurance that a comparable offer would be available.
(v) Potential Decline in Stock Price. Historical data from failed take-private transactions demonstrate that target companies frequently experience stock price declines of 15% to 30% or more following the announcement of a deal termination, as the deal premium dissipates and the market factors in the uncertainties described above.
In light of the $6.8 billion deal value and the magnitude of the potential harm across these categories, the $374,000,000 RTF — representing 5.5% of equity value — is eminently reasonable.
Key Case Law. The enforceability of reverse termination fees is supported by the seminal Delaware authority:
• Hexion Specialty Chemicals, Inc. v. Huntsman Corp., 965 A.2d 715 (Del. Ch. 2008): Vice Chancellor Lamb confirmed that reverse termination fees are enforceable as liquidated damages provisions and that specific performance is available to the target where the buyer has not bargained for a true "option" to walk away from the transaction simply by paying the RTF. The court distinguished between transactions in which the RTF functions as an option premium — providing the buyer with a unilateral right to terminate for any reason upon payment — and transactions in which the RTF serves as a damages remedy for specific buyer failures. In the latter case, specific performance of the buyer's obligation to close remains available.
In the Cloudium transaction, the Reverse Termination Fee is not structured as an option premium. The RTF is payable only upon the occurrence of specific triggering events — buyer breach, financing failure, or buyer failure to close by the Outside Date. Moreover, Cloudium retains the right to seek specific performance to compel Solara to enforce its financing commitments and close the merger. The specific performance right ensures that Cloudium is not relegated to a damages remedy where the merger can be consummated if Solara's financing sources perform. The RTF serves as a backstop remedy — payable only if specific performance is not sought, is unavailable, or if the financing genuinely cannot be obtained despite Solara's compliance with its obligations.
D. Financing Risk and Reverse Termination Fee Rationale
The RTF is fundamentally a risk-allocation mechanism that compensates Cloudium for the financing risk inherent in a leveraged take-private transaction. The following financing structure and risk factors inform the RTF's quantum:
Debt Financing Structure. The total committed debt financing is $4,240,000,000, consisting of a $3,740,000,000 Term Loan B and a $500,000,000 Revolving Credit Facility. The commitments are provided by Meridian Atlantic Bank, N.A. (lead arranger and administrative agent) and Ironclad Capital Markets LLC (co-arranger) pursuant to the Debt Commitment Letter. The conditions to the lenders' obligation to fund the debt facilities are subject to SunGard-limited conditionality — meaning that the conditions to the debt funding substantially mirror the conditions to the closing of the merger. This construct significantly reduces, but does not eliminate, the risk that the debt financing will be unavailable at closing.
Key Financing Risks. Notwithstanding the SunGard-limited conditionality, the following financing risks exist between signing and closing:
(i) Credit Market Disruption. In the period between signing and closing — potentially up to five months, through the June 30, 2024 Outside Date — credit market conditions may deteriorate materially. A significant disruption in the leveraged loan or high-yield markets could impair the arrangers' ability to syndicate the Term Loan B or could trigger flex provisions in the Fee Letter that alter the economics of the financing.
(ii) Failure to Satisfy Debt Commitment Letter Conditions. The debt financing commitments are contingent upon the accuracy of specified representations, the absence of a material adverse effect, and the delivery of required financial statements, among other conditions. While these conditions are limited to the SunGard framework, a failure to satisfy any of them could excuse the lenders' obligation to fund.
(iii) Flex Provisions. The Fee Letter associated with the Debt Commitment Letter contains customary flex provisions that permit the arrangers to adjust pricing, structure, and other terms of the debt facilities to facilitate syndication. While the flex provisions do not relieve the arrangers of their commitment to fund, they could materially affect the economics of the financing for Fund VI.
Equity Commitment. The equity commitment of $2,832,888,096 from Fund VI is not subject to financing market conditions. Fund VI's obligation to fund the Equity Commitment is absolute, subject only to the satisfaction of the conditions to closing of the merger. Accordingly, the primary financing risk in this transaction lies on the debt side.
Ticking Fee. The Debt Commitment Letter provides for a ticking fee on the undrawn Term Loan B commitments of 0.25% per annum, commencing ninety (90) days after signing (April 22, 2024). The ticking fee creates an economic incentive for Solara to close the transaction promptly and avoid the accumulating cost of carrying the undrawn commitments.
RTF as Risk Compensation. The 5.5% Reverse Termination Fee gives Solara a quantified "cost of walking away" that appropriately compensates Cloudium for the financing and closing risks described above. The RTF is calibrated to provide meaningful compensation without being punitive. In the unlikely event that Solara is genuinely unable to fund the transaction — for example, if both the debt financing and the specific performance remedy fail — the $374,000,000 RTF provides Cloudium with substantial resources to weather the post-termination period, cover transaction costs, and position itself for alternative strategic paths.
E. Negotiation History
The Reverse Termination Fee was the most intensely negotiated economic term in the Merger Agreement. The negotiation progressed as follows:
• Target's Initial Position. Ridgeway Phelps & Sato LLP, on behalf of Cloudium, initially proposed a reverse termination fee of 8.0% of equity value, or $544,000,000. In addition, Cloudium's counsel sought uncapped specific performance rights — that is, the right to compel Solara to close the merger without limitation, effectively converting the merger into a mandatory obligation for Solara regardless of financing availability.
• Buyer's Counter. Calderwood & Harkness LLP, on behalf of Solara, countered at 4.5% of equity value, or $306,000,000. Solara proposed that specific performance be limited to the right to compel Solara to enforce its obligations under the Debt Commitment Letter and the Equity Commitment Letter — but not the right to compel the debt financing sources directly, consistent with the non-recourse limitations in favor of the lenders.
• Final Agreement. Through extensive negotiation in late December 2023 and early January 2024, the parties settled on 5.5% of equity value, or $374,000,000. The specific performance rights granted to Cloudium permit Cloudium to compel Solara to enforce its financing commitments (i.e., to take all actions required to cause the financing to be funded in accordance with the Debt Commitment Letter and Equity Commitment Letter). The RTF is payable only if specific performance is not sought by Cloudium, is sought but is unavailable (e.g., because the conditions to the financing have not been satisfied), or is otherwise not a viable remedy.
• Limited Guarantee Compromise. As part of the RTF negotiation, the parties agreed on the limited guarantee structure discussed in Section V below. The limited guarantee from Fund VI GP LLC was offered as a credit-worthy backstop in exchange for Cloudium accepting an RTF below the 8.0% level initially proposed. The guarantee covers $246,000,000 — the termination fee amount plus $25,000,000 in enforcement costs — rather than the full RTF amount. This compromise structure is discussed in detail below.
The final RTF of 5.5% represents a balanced outcome that appropriately compensates Cloudium for financing risk while preserving acceptable exposure levels for Fund VI and its limited partners.
V. Interplay with Limited Guarantee
A. Structure of the Limited Guarantee
Concurrent with the execution of the Merger Agreement, the parties anticipate the execution of a Limited Guarantee dated January 22, 2024 (the "Limited Guarantee") by and among Solara Fund VI GP LLC (the "Guarantor"), as general partner of Fund VI, and Cloudium Technologies plc (the "Beneficiary"). The material terms of the Limited Guarantee are as follows:
Guarantor: Solara Fund VI GP LLC, a Delaware limited liability company and the general partner of Fund VI.
Beneficiary: Cloudium Technologies plc.
Guaranteed Amount: $246,000,000, which is the maximum aggregate liability of the Guarantor under the Limited Guarantee. The Guaranteed Amount is comprised of:
(i) $221,000,000, equal to the Termination Fee amount, which serves as the primary credit support for Fund VI's Reverse Termination Fee obligation; and
(ii) $25,000,000 for reimbursement of Cloudium's enforcement costs (including reasonable attorneys' fees and expenses) incurred in connection with enforcing the Limited Guarantee or the Reverse Termination Fee obligation.
Important Note Regarding Guarantee Coverage vs. RTF. It is important to emphasize that the Limited Guarantee of $246,000,000 does not cover the full $374,000,000 Reverse Termination Fee. The structure is as follows:
• Fund VI itself is obligated for the full RTF of $374,000,000 under Section 8.03(b) of the Merger Agreement.
• The Limited Guarantee from Fund VI GP LLC provides secondary credit-worthy recourse to Cloudium, but only up to $246,000,000.
• Cloudium's primary recourse for the RTF is against Fund VI directly. The Limited Guarantee provides a backstop from a clearly creditworthy entity (the GP) at a lower amount, ensuring that Cloudium has recourse to an entity with fiduciary obligations and direct access to Fund VI's committed capital.
This two-tiered recourse structure is standard in private equity take-private transactions. The GP entity provides a guarantee capped at the termination fee amount (or a similar dollar figure) to give the target confidence in the creditworthiness of its counterparty, while the full RTF obligation remains with the fund entity. The structure avoids exposing the GP entity to liability in excess of customary levels while providing the target with a direct claim against a well-capitalized guarantor.
Non-Recourse Provisions. The Limited Guarantee contains standard non-recourse provisions. There is no recourse beyond Fund VI GP LLC to any other Solara entity, any limited partner of Fund VI, any portfolio company of any Solara fund, or any individual (including Marcus Elliston and Priya Narasimhan). The non-recourse provisions are a cornerstone of the PE deal structure and reflect the fundamental principle that the limited partners of a private equity fund are passive investors whose liability is limited to their capital commitments.
B. Enforceability and Delaware Law Considerations
Limited guarantees are routinely enforced by Delaware courts. The Delaware Court of Chancery has addressed the enforceability of limited guarantee structures in the PE take-private context and has generally upheld such instruments where they are clearly drafted and the terms are unambiguous. Relevant authority includes:
• SemGroup Energy Partners, G.P., LLC v. SemGroup, Inc. (Del. Ch.): The court analyzed the scope of limited recourse and non-recourse provisions in the context of a transaction involving private equity sponsors. The court enforced the contractual limitations on recourse, holding that clearly drafted non-recourse provisions will be respected and that a claimant's recovery is limited to the entities and amounts specified in the guarantee.
• Broader Delaware authority on the enforceability of contractual caps on liability supports the conclusion that the $246,000,000 cap in the Limited Guarantee is enforceable and will be respected by Delaware courts.
The cap at $246,000,000 is clearly defined in the Limited Guarantee and constitutes a maximum aggregate liability for the Guarantor. This clear delineation eliminates ambiguity and minimizes the risk of litigation over the scope of recourse. The Limited Guarantee will be governed by Delaware law, consistent with the governing law provision of the Merger Agreement, and Fund VI GP LLC is a Delaware limited liability company subject to Delaware jurisdiction.
C. Practical Implications
The practical operation of the Limited Guarantee and the RTF in a termination scenario is as follows:
(i) If the RTF is triggered and Fund VI pays the full $374,000,000 directly to Cloudium, the Limited Guarantee is not implicated and expires by its terms.
(ii) If the RTF is triggered and Fund VI fails to pay, Cloudium can pursue Fund VI GP LLC under the Limited Guarantee for up to $246,000,000.
(iii) The gap between the RTF ($374,000,000) and the Limited Guarantee ($246,000,000) is $128,000,000. This amount is recoverable only from Fund VI directly. Fund VI has $12.4 billion in committed capital (vintage 2022), with the Equity Commitment of $2,832,888,096 representing only a portion of total commitments. Fund VI is amply capitalized to satisfy the RTF obligation, and the risk that Fund VI would be unable to pay the full $374,000,000 is extremely low.
Negotiation Context. Target's counsel (Ridgeway Phelps & Sato LLP) initially sought a guarantee covering the full RTF amount of $374,000,000. Calderwood & Harkness LLP, on behalf of Solara, successfully negotiated a guarantee covering only the termination fee amount ($221,000,000) plus enforcement costs ($25,000,000), which is consistent with prevailing market practice. The rationale for this structure is twofold: first, it protects Fund VI's limited partners from guarantee exposure beyond the customary level; and second, Cloudium's recourse against Fund VI directly for the full RTF is sufficient given Fund VI's capital base, making a full-coverage guarantee unnecessary as a practical matter.
VI. Interaction Between Termination Fee, Reverse Termination Fee, and Other Deal Protections
A. No-Shop Provision and Fiduciary Out
The Merger Agreement includes a no-shop provision effective from signing (January 22, 2024) pursuant to Section 6.05(a). From and after the execution of the Merger Agreement, Cloudium is prohibited from, directly or indirectly, (i) soliciting, initiating, proposing, or knowingly encouraging or facilitating any inquiry, proposal, or offer with respect to a competing Acquisition Proposal, (ii) entering into, continuing, or otherwise participating in any discussions or negotiations regarding a competing Acquisition Proposal, (iii) providing any non-public information to any person in connection with a competing Acquisition Proposal, or (iv) entering into any letter of intent, memorandum of understanding, merger agreement, acquisition agreement, or similar agreement with respect to a competing Acquisition Proposal.
The no-shop is subject to a fiduciary-out exception set forth in Section 6.05(c). The Cloudium board may engage with an unsolicited Superior Proposal if the board determines in good faith, after consultation with its outside legal counsel and financial advisors, that failure to engage with such Superior Proposal would be inconsistent with the directors' fiduciary duties under applicable law. If the board ultimately determines to accept a Superior Proposal, it may terminate the Merger Agreement pursuant to Section 8.01(g), subject to the payment of the $221,000,000 Termination Fee.
The Termination Fee operates in tandem with the no-shop provision to create a balanced deal-protection framework. The no-shop restricts Cloudium's ability to actively seek alternatives after signing, while the Termination Fee provides Solara with economic compensation in the event that Cloudium's board exercises its fiduciary out. Together, these provisions protect Solara's investment in the transaction — including its substantial diligence, legal, advisory, and financing costs — while permitting the Cloudium board to satisfy its fiduciary obligations to stockholders.
B. Escrow and Indemnification
The Termination Fee and Reverse Termination Fee address pre-closing break scenarios — situations in which the Merger Agreement is terminated prior to the consummation of the merger. Post-closing, the parties' remedies are governed by the indemnification provisions set forth in Article X of the Merger Agreement and by the related escrow and insurance arrangements.
The key post-closing indemnification terms are as follows:
• Indemnification Cap: 15% of the aggregate deal value, or $1,020,000,000.
• Escrow: $544,000,000 (8% of deal value) deposited with Cobalt Trust Company as escrow agent, to serve as the initial source of indemnification payments.
• Survival Period: Eighteen (18) months following the closing date, expiring on or about January 9, 2026 (assuming a July 2024 closing).
• Tipping Basket: 0.75% of deal value, or $51,000,000. The indemnifying party is not obligated to make indemnification payments until aggregate indemnifiable losses exceed the tipping basket, at which point the indemnifying party is liable for all losses from the first dollar (not merely the excess above the basket).
• De Minimis Threshold: $500,000. Individual claims with a value below $500,000 are excluded from the calculation of the tipping basket.
• Representations and Warranties Insurance: Northfield Assurance Ltd. has bound a representations and warranties insurance policy (Policy No. NFA-TRI-2024-00487) with a policy limit of $680,000,000 above a $544,000,000 retention (equal to the escrow amount). The R&W insurance policy provides coverage to Solara for breaches of Cloudium's representations and warranties, subject to the terms and exclusions of the policy.
These post-closing protections are distinct from, and do not reduce or offset, the pre-closing Termination Fee or Reverse Termination Fee. The Termination Fee and RTF govern the parties' rights and remedies in a pre-closing termination scenario, while the indemnification provisions, escrow, and R&W insurance govern post-closing claims. The two regimes are complementary but do not overlap.
C. Sole and Exclusive Remedy
Both the Termination Fee and the Reverse Termination Fee are expressed in Section 8.03(c) of the Merger Agreement as the sole and exclusive remedy of the receiving party in the applicable termination scenarios. Specifically:
• Upon payment of the Termination Fee, Solara's sole and exclusive remedy against Cloudium and its affiliates with respect to the applicable termination event is the receipt of the Termination Fee.
• Upon payment of the Reverse Termination Fee, Cloudium's sole and exclusive remedy against Solara, Fund VI, Merger Sub, and their respective affiliates with respect to the applicable termination event is the receipt of the Reverse Termination Fee.
Fraud and Willful Breach Exception. The sole and exclusive remedy limitation is subject to a carveout for fraud and willful breach. If either party can establish that the other party committed fraud (as defined in the Merger Agreement) or willful breach (defined as a material breach of the Merger Agreement that is the consequence of an intentional act or intentional failure to act by the breaching party with knowledge that such act or failure to act would constitute a breach), the non-breaching party may pursue damages beyond the applicable fee, including expectation damages and, potentially, specific performance.
This "exclusive remedy" framework is consistent with market standard and Delaware law requirements. It provides certainty and capped risk exposure for both parties, allowing each side to quantify its maximum liability in a break scenario and to plan accordingly. The framework also reduces the likelihood of protracted post-termination litigation, as the fee payment terminates the parties' obligations and provides a clean exit.
Specific Performance as Alternative Remedy. As discussed in Section IV.A above, specific performance is available to Cloudium as an alternative remedy — not cumulative with the RTF — to compel Solara to enforce its financing commitments and close the merger. If specific performance results in the consummation of the merger, the RTF is not payable. This construct ensures that Cloudium's preferred outcome — completion of the merger and receipt of the merger consideration — takes priority over the monetary damages remedy.
VII. Risk Assessment and Recommendations
A. Termination Fee Risk to Cloudium
Risk. If a Superior Proposal emerges during the pre-closing period and the Cloudium board exercises its fiduciary out to accept such Superior Proposal, Cloudium is obligated to pay the $221,000,000 Termination Fee to Fund VI. This liability represents a direct cost to Cloudium and, indirectly, to a successful topping bidder (which would typically assume or reimburse the Termination Fee as a condition of its acquisition of Cloudium).
Mitigation. The Termination Fee was negotiated at arm's length between experienced counsel and falls within the market range for transactions of this size and type. At 3.25% of deal value, the fee is not so large as to deter a genuinely interested topping bidder. Any competing bidder that is prepared to offer a meaningfully higher price for Cloudium — sufficient to constitute a Superior Proposal — would rationally account for the Termination Fee as a transaction cost and would be willing to absorb or reimburse it. Moreover, the fee is well within the ranges that Delaware courts have consistently upheld as non-preclusive and non-coercive.
Recommendation. No further negotiation is warranted on the Termination Fee percentage. The 3.25% rate is appropriate, defensible under Delaware law, and consistent with the overall deal protection package. We recommend that the team maintain the current position at the January 15 negotiation session and resist any pressure from Ridgeway Phelps to reduce the fee below 3.25%.
B. Reverse Termination Fee Risk to Solara/Fund VI
Risk. If the debt financing fails to fund and Solara is unable to consummate the merger, Fund VI faces liability of $374,000,000 — a significant amount even in the context of Fund VI's $12.4 billion in committed capital. The RTF represents an unreturned cost to Fund VI's limited partners if triggered.
Mitigation. The risk of the RTF being triggered is mitigated by several structural protections:
(i) SunGard-Limited Conditionality. The conditions to the lenders' obligation to fund the debt financing under the Debt Commitment Letter substantially mirror the conditions to the closing of the merger. This means that the debt financing cannot be withdrawn on grounds that are not also grounds for the failure of a closing condition. If the merger conditions are satisfied, the debt should fund.
(ii) Creditworthiness of Arrangers. Meridian Atlantic Bank, N.A. and Ironclad Capital Markets LLC are well-capitalized, market-leading arrangers with strong track records of honoring their commitments. The risk that these institutions would refuse to fund in violation of their obligations is low, though not zero.
(iii) Unconditioned Equity Commitment. Fund VI's equity commitment of $2,832,888,096 is not subject to financing market conditions. Fund VI's obligation to fund the equity is absolute, contingent only on the satisfaction of the merger closing conditions. The primary financing risk therefore lies with the debt financing, not the equity.
(iv) Specific Performance. Cloudium's right to seek specific performance to compel Solara to enforce its financing commitments creates a powerful incentive for Solara to take all necessary steps to cause the debt financing to fund. Solara cannot passively allow the financing to lapse; it must actively enforce its rights under the Debt Commitment Letter, and Cloudium can seek judicial relief to compel such enforcement.
Regulatory Risk. The transaction requires HSR clearance (FTC/DOJ) and CMA Phase 1 clearance (United Kingdom). If regulatory clearance is denied and the Outside Date passes, the RTF is not automatically payable. A regulatory failure would constitute a failure of a closing condition — not a buyer breach — and therefore would not trigger the RTF. However, if Solara fails to use its best efforts to obtain regulatory approval, as required under Section 6.08 of the Merger Agreement, such failure could constitute a breach of Solara's covenants, potentially triggering the RTF under the buyer breach provision. This underscores the importance of Solara's diligent prosecution of the regulatory approval process.
Recommendation. The 5.5% Reverse Termination Fee is within the market range for PE take-privates and is acceptable given the financing structure and overall deal economics. The specific performance construct and SunGard-limited conditionality in the Debt Commitment Letter minimize the likelihood of the RTF being triggered. We recommend that the deal team resist any effort by Ridgeway Phelps to increase the RTF above 5.5% at the January 15 session.
C. Limited Guarantee Exposure
Exposure. Fund VI GP LLC's maximum aggregate liability under the Limited Guarantee is $246,000,000. This amount is manageable in the context of Fund VI's $12.4 billion in committed capital and is consistent with market practice for GP guarantees in PE take-private transactions.
Governance. Marcus Elliston and Priya Narasimhan, as Managing Partners of Solara, have been advised of the guarantee structure and the exposure of Fund VI GP LLC. No personal liability extends to any individual under the Limited Guarantee or the Merger Agreement. The non-recourse provisions in the Limited Guarantee and the Merger Agreement insulate all individuals, limited partners, and portfolio companies from claims by Cloudium or its affiliates.
Recommendation. The limited guarantee structure is appropriate and standard. No changes to the guarantee amount, scope, or structure are recommended. We should resist any attempt by Ridgeway Phelps to expand the guarantee to cover the full RTF amount of $374,000,000, as such expansion would exceed market norms and create unnecessary exposure for Fund VI GP LLC.
VIII. Conclusion
Based on the foregoing analysis, we offer the following conclusions:
1. Termination Fee. The 3.25% Termination Fee ($221,000,000) is positioned at the midpoint of the market range for large-cap technology take-private transactions, is enforceable under Delaware law, and provides adequate deal protection for Solara without being preclusive to competing bids or impairing the Cloudium board's ability to exercise its fiduciary duties.
2. Reverse Termination Fee. The 5.5% Reverse Termination Fee ($374,000,000) is within the standard range for PE take-privates, appropriately compensates Cloudium for financing and closing risk, and is enforceable as a liquidated damages provision under Delaware law. The 1.69x RTF/TF ratio is consistent with the 1.5x to 2.0x band observed in comparable transactions.
3. Limited Guarantee. The Limited Guarantee from Fund VI GP LLC ($246,000,000) provides credit-worthy recourse for Cloudium while limiting fund-level exposure in a market-standard manner. The guarantee coverage — equal to the termination fee amount plus enforcement costs — is appropriate and consistent with prevailing practice.
4. Overall Deal Protection Framework. The interplay among the Termination Fee, Reverse Termination Fee, Limited Guarantee, no-shop provision, fiduciary out, and specific performance rights creates a balanced deal-protection framework that is consistent with Delaware law and current market practice. Each element complements the others, and the overall architecture appropriately allocates risk between the parties.
5. Recommendation for January 15 Negotiation Session. We recommend maintaining the current positions on both fees. The deal team should resist any further increase in the RTF or expansion of the Limited Guarantee to cover the full RTF amount. If Ridgeway Phelps seeks additional concessions, the team should emphasize that the current terms are at or above market median and reflect a fair, arm's-length negotiation. Any adjustments to the fee structure should be evaluated in the context of the full package of deal protections and should be conditioned on reciprocal concessions from the target.
Appendix A: Comparable Transaction Summary Table
The following table summarizes the termination fee and reverse termination fee terms in comparable large-cap technology and software PE take-private transactions completed or announced in 2022–2023:
Summary Statistics:
Cloudium / Solara Transaction: TF = 3.25%; RTF = 5.50%; RTF/TF Ratio = 1.69x. The Cloudium Termination Fee is slightly above the median, and the Reverse Termination Fee is at the median. The RTF/TF ratio of 1.69x is slightly below the median of 1.85x, reflecting Solara's successful negotiation of a more moderate RTF relative to the Termination Fee.
Appendix B: Key Delaware Case Law Summary
1. *In re Dollar Thrifty Shareholder Litigation*, C.A. No. 5458-VCS (Del. Ch. 2010)
Court: Delaware Court of Chancery (Vice Chancellor Strine)