M&A
Break Fee
Reviewed by iGaming Times editorial teamLast reviewed 24 September 2026
What is Break Fee?
A sum the target pays the buyer if the target walks away from a signed acquisition, usually to accept a better offer or because its board withdraws its recommendation. Also called a company termination fee.
Key takeaways
- A break fee is paid by the target to the buyer if the target walks away from a signed acquisition.
- It compensates the buyer's costs and deters rivals, who must beat the agreed price plus the fee.
- Deals often set a reduced fee during a go-shop period, as Caesars' 2026 agreement did at $100 million against $200 million.
Why it matters
A break fee compensates a buyer for the cost of a deal that dies on the seller’s side: the diligence bill, the financing commitments, the management time and the opportunity cost of not pursuing something else. It also does quieter work, discouraging rival bidders, because any competing offer must clear the incumbent price plus the fee before the target’s board can prefer it.
That deterrent effect is why the size is contested and why regulators and courts look at it. A fee of one to three per cent of equity value is the conventional range; much beyond that and the fee starts to function as a lock-up rather than a cost recovery. Merger agreements often set two levels, a reduced fee during the go-shop period and a full fee afterwards, on the logic that a bidder emerging from an active solicitation the target itself ran is a different proposition from one that appears unprompted months later. Caesars Entertainment’s 2026 agreement uses exactly that structure, at $100 million and $200 million. For anyone reading a gambling deal, the break fee and the go-shop terms should be read together: a short go-shop with a large fee is a board that has decided, and a long one with a reduced fee is a board still testing the market.
The bottom line
A break fee compensates a jilted buyer and quietly raises the bar for anyone else. Read it alongside the go-shop period, never on its own.
Sources
- Caesars Entertainment, Inc. definitive merger proxy statement (DEFM14A) - US Securities and Exchange Commission
Break Fee elsewhere on iGaming Times
In the news
Frequently asked questions
What is a break fee in M&A?
A break fee, also called a company termination fee, is a sum the target pays the buyer if the target walks away from a signed acquisition, usually to accept a better offer or because its board withdraws its recommendation. It compensates the buyer for diligence, financing and management costs, and it raises the bar for rival bidders, who must beat the agreed price plus the fee.
How big is a typical break fee?
A fee of one to three per cent of equity value is the conventional range. Much above that, the fee starts to work as a lock-up that deters competing bids rather than as cost recovery, which is why courts and regulators look at it. Many agreements set two levels: a reduced fee during a go-shop period and a full fee afterwards.
What is the difference between a break fee and a reverse termination fee?
A break fee is paid by the target to the buyer when the deal fails on the target's side. A reverse termination fee runs the other way: the buyer pays the target if the buyer cannot complete, for example because financing or regulatory approval falls through. Caesars Entertainment's 2026 merger agreement contains both, with a company fee of up to $200 million and a reverse fee of $450 million.