# Break Fee

*Corporate Finance & M&A — Finicade finance glossary*

A break fee compensates one side if a deal collapses for defined reasons — typically 1–3% of deal value if the target accepts a better offer. A reverse break fee runs the other way, paid by the buyer if financing or regulatory approval fails, and has reached billions in blocked mega-deals. Fees set too high deter competing bids, which is why courts scrutinise them as a takeover defence.

**Also known as:** termination fee, reverse break fee

**Related terms:** [Letter of Intent](https://finicade.com/glossary/letter-of-intent), [Mergers and Acquisitions (M&A)](https://finicade.com/glossary/mergers-and-acquisitions), [Material Adverse Change](https://finicade.com/glossary/material-adverse-change), [Hostile Takeover](https://finicade.com/glossary/hostile-takeover), [White Knight](https://finicade.com/glossary/white-knight)

Source: https://finicade.com/glossary/break-fee