DEFINITION of 'Deal Breaker'

A deal breaker, in business and politics, is an issue that is significant enough that one party will discontinue negotiations and withdraw from a transaction unless it is resolved.

BREAKING DOWN 'Deal Breaker'

A deal breaker may relate to price, payment, terms of employment, quality, etc., or involve the presence of a particular requirement in a contract or the lack of a certain provision.

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 will not be able to change the terms later. However, the presence of deal breakers, helps both parties in a negotiation know what it will take to secure a deal.

Example of a Deal Breaker in Business

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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