Break Fee


DEFINITION of '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.

  1. Vertical Merger

    A merger between two companies producing different goods or services ...
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    A merger occurring between companies in the same industry. Horizontal ...
  3. Acquisition

    A corporate action in which a company buys most, if not all, ...
  4. Management Fee

    A charge levied by an investment manager for managing an investment ...
  5. Lease

    A legal document outlining the terms under which one party agrees ...
  6. Merger

    The combining of two or more companies, generally by offering ...
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