How one man challenges convention in style and (legal) practice by eschewing the entrenched reverse breakup fee in leveraged buyouts.

On a cold day last January, Faiza Saeed rooted herself in her Midtown Manhattan office at Cravath, Swaine & Moore, her thoughts swirling around a single contract proviso. Negotiations were heating up on Laureate Education's $3.8 billion sale to a blue-chip consortium that included Kohlberg Kravis Roberts, Citi Private Equity and SAC Capital. Morgan Stanley, Laureate's financial adviser, was relying on Saeed to help it with the legal wrangling. On a key conference call with Morgan bankers, she leveled her opinion: The reverse breakup fee provision had gone unquestioned long enough. Now, she maintained, it was time to draw a line in the sand.

As Saeed, now 42, saw it, the fee was a one-way option held by the buyers, easing their ability to break the deal with no further recourse for Laureate. Instead of embracing this status quo, the artful lawyer sought to adopt a more imaginative provision — used sporadically in other deals — that ensured an airtight financing condition while also enforcing equity funding through third-party beneficiary rights and retaining specific enforcement abilities to make the agreement stick.

"Faiza is no wallflower," says Mark Van Lith, head of the media-banking group at Bear Stearns, who got to know her while working on opposite sides of the table during DreamWorks SKG's sale to Viacom's Paramount Pictures. "She's really good at deconstructing the Rube Goldberg machine."

Morgan was sold on Saeed's logic, immediately negotiating the new provision into the final agreement that was signed at the end of last January. Good thing: By the time the deal was completed in mid-August, the summer credit crunch had put dozens of buyout deals in jeopardy, spurring some firms — Harman International, Acxiom, SLM and United Rentals, among others — to play the breakup-fee card. As Richard Brail, Morgan Stanley's lead banker on the Laureate deal, attests: "If we didn't have the appropriate provisions or features and had merely to rely on the reverse breakup fee, the buyer potentially could have paid the fee and gone home. There may not have been a deal."

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