Break Fee

AAA

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.

INVESTOPEDIA EXPLAINS 'Break Fee'

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.

RELATED TERMS
  1. Acquisition

    A corporate action in which a company buys most, if not all, ...
  2. Horizontal Merger

    A merger occurring between companies in the same industry. Horizontal ...
  3. Lease

    A legal document outlining the terms under which one party agrees ...
  4. Management Fee

    A charge levied by an investment manager for managing an investment ...
  5. Vertical Merger

    A merger between two companies producing different goods or services ...
  6. Merger

    The combining of two or more companies, generally by offering ...
Related Articles
  1. Mergers And Acquisitions: Understanding ...
    Fundamental Analysis

    Mergers And Acquisitions: Understanding ...

  2. The Merger - What To Do When Companies ...
    Investing Basics

    The Merger - What To Do When Companies ...

  3. Mergers & Acquisitions: An Avenue For ...
    Forex Education

    Mergers & Acquisitions: An Avenue For ...

  4. Trade Takeover Stocks With Merger Arbitrage
    Active Trading Fundamentals

    Trade Takeover Stocks With Merger Arbitrage

comments powered by Disqus
Hot Definitions
  1. 80-10-10 Mortgage

    A mortgage transaction in which a first and second mortgage are simultaneously originated. The first position lien has an ...
  2. Passive ETF

    One of two types of exchange-traded funds (ETFs) available for investors. Passive ETFs are index funds that track a specific ...
  3. Walras' Law

    An economics law that suggests that the existence of excess supply in one market must be matched by excess demand in another ...
  4. Market Segmentation

    A marketing term referring to the aggregating of prospective buyers into groups (segments) that have common needs and will ...
  5. Effective Annual Interest Rate

    An investment's annual rate of interest when compounding occurs more often than once a year. Calculated as the following: ...
  6. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
Trading Center