Series 79: Breakup Fee

Taken from our FINRA Investment Banking Exam

Definition of the term Breakup Fee...

in an M&A transaction, a fee that the seller must pay if it withdraws from the definitive agreement because it has received a better offer. The fee compensates the buyer for its time and expense. Such a withdrawal may only occur if the definitive agreement has an out that allows it. If so, the out will specify the amount of the fee.

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