A ticking fee is a price increase payable by the buyer to the seller when the closing of an M&A transaction is delayed beyond an agreed date — compensating the seller for the loss of enjoyment of the sale proceeds during the delay period. It is expressed as an annual percentage of the transaction price and accrues daily from the trigger date until actual closing. Ticking fees are most common in transactions subject to lengthy regulatory approvals (merger control, FINMA, sector-specific licenses) where the signing-to-closing window can extend to 4–9 months.

The ticking fee rate is typically aligned with the seller's carrying cost — ranging from 6–12% per annum in Franco-Swiss transactions, equivalent to 0.016–0.033% per calendar day. The structure often includes a grace period (the first 30–60 days post-signing carry no ticking fee), followed by a first tranche rate and then a higher second tranche rate if the delay extends beyond a critical threshold. This progressive structure creates increasing financial pressure on the buyer to accelerate regulatory clearance and financing close.

The ticking fee is negotiated alongside the Long Stop Date: a longer Long Stop Date justifies a higher ticking fee (the seller faces greater uncertainty and foregoes value for longer); a shorter LSD may make a ticking fee unnecessary if the closing timeline is reliably predictable. From a financial modelling perspective, the ticking fee accrual increases the effective price paid by the buyer and must be included in the total acquisition cost for returns modelling.

At Hectelion, we structure and negotiate ticking fee provisions in our M&A advisory mandates to protect sellers against extended closing timelines.