Break Up Fee
A break up fee is a penalty paid by a party that backs out of a merger or acquisition agreement. This fee compensates the non-breaching party for time and resources invested in the deal, serving as a deterrent against uncommitted offers.
Key Takeaways
- Break up fees are penalties for backing out of merger or acquisition agreements.
- Compensate the non-breaching party for time and resources invested.
- Act as a deterrent against uncommitted offers.
- Common in M&A agreements to ensure commitment.
