DEFINITION of 'Deal Breaker'

An issue that, if left unresolved, prompts one party to discontinue discussions. A deal breaker may involve the presence of a particular requirement in a contract, or the lack of a certain provision.

BREAKING DOWN 'Deal Breaker'

For negotiations that are non-iterative, meaning that there is no further interaction once terms are satisfied, the parties involved can be unwilling to budge over certain issues because they know that this is their only chance at getting what they want. The presence of a deal breaker, however, helps both parties in a negotiation know how to maneuver and help determine each other's pain points.

For example, a company attempting to merge with a competitor may discover that the competitor will only let the merger proceed if a certain number of its employees are kept on board with the new venture. This may be a deal breaker for the acquiring company.

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