Break Fee

1. A fee paid by a target company to bidders (during an acquisition) if the pending deal is terminated.

2. A fee paid by one party of a contract to another in order to terminate or cancel legal obligations.

1. Supposedly used to recoup costs and fees associated with due diligence during an acquisition. These break fees are seemingly used more and more for the purpose of restoring lost reputations arising from deals falling through.

2. Common in lease agreements, these break fees are penalties charged against parties not wishing to fulfill their portion of a contract.


Investment dictionary. . 2012.

Look at other dictionaries:

  • break fee — ➔ fee * * * break fee UK US noun [C] LAW ► (also break up fee) a payment that a company must make if it does not keep an agreement to be sold to another company: »There is a £6m break fee if the company sells out to another bidder. ► a payment …   Financial and business terms

  • break fee — Fee payable by one party to the other if the deal does not proceed for a specified reason (e.g., seller has agreed to sell the business to another party). Provision can be unenforceable if not drafted properly; in particular, it needs to be a… …   Law dictionary

  • break fee — noun (finance) A payment made by one party in a financial agreement to another in order to escape from the terms of the agreement • • • Main Entry: ↑break …   Useful english dictionary

  • reverse break fee — USA reverse break up fee, Also known as a reverse termination fee or a reverse break fee. A fee paid by the buyer if it breaches the acquisition agreement or is unable to consummate the transaction due to lack of financing and the seller… …   Law dictionary

  • break-up fee — USA Also known as a break fee or a termination fee. This term has a number of meanings. In the context of: • Mergers and acquisitions, a payment from the seller to the buyer if a merger or acquisition transaction is not completed as a result of… …   Law dictionary

  • break-up fee — UK US noun [C] ► LAW BREAK FEE(Cf. ↑break fee) …   Financial and business terms

  • break fees — Also known as failure costs agreements. A payment from the buyer or seller to the other (or possibly payable by the target itself) if the deal does not proceed to signing or closing. Common situations that trigger a break fee payment are breach… …   Law dictionary

  • fee — A fixed amount or a percentage of an underwriting or principal. Bloomberg Financial Dictionary * * * fee fee [fiː] noun 1. [countable] COMMERCE an amount of money paid to a professional person or organization for their services: • If you want… …   Financial and business terms

  • termination fee — USA Also known as a break fee or a termination fee. This term has a number of meanings. In the context of: • Mergers and acquisitions, a payment from the seller to the buyer if a merger or acquisition transaction is not completed as a result of… …   Law dictionary

  • reverse break-up fee — USA reverse break up fee, Also known as a reverse termination fee or a reverse break fee. A fee paid by the buyer if it breaches the acquisition agreement or is unable to consummate the transaction due to lack of financing and the seller… …   Law dictionary

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