Break Fee

A penalty incurred when one party chooses to “walk away” from a deal or contract, rather than seeing it thru to completion.

P. Nut Butter, Inc. (PBI) was looking to expand into new markets, but needed a partner to facilitate that growth. After intense due diligence, its CEO agreed to a merger with a Dutch firm, A. van Nilla (AVN), with plans to consummate the deal on September 29th.

But then, by chance, at a dog park on September 28th, PBI’s CEO met the Chairwoman of Philadelphia-based coffee purveyor, Chock-O-Lot (COL) and realized they were a match made in heaven. PBI gladly paid AVN a $1 million break fee, and by October 1st, PBI and COL merged...to the benefit of everyone involved.