Practical Law Glossary Item 7-382-3770 (Approx. 3 pages)
Glossary
Reverse Break-Up Fee
Also known as a reverse termination fee or a reverse break fee. In an acquisition agreement, it is a fee paid by the buyer to the seller or target company if the buyer breaches the acquisition agreement or is unable to consummate the transaction due to lack of financing or regulatory approval and the seller terminates the agreement in accordance with its terms. If an acquisition agreement provides for a reverse break-up fee, the amount of the reverse break-up fee and the conditions under which it is paid are usually set out in the termination provisions of the acquisition agreement. For a discussion of reverse break-up fees, see Practice Notes, Reverse Break-Up Fees and Specific Performance and Drafting and Negotiating Reverse Break-Up Fee and Specific Performance Provisions.