Break-up fees are clauses inserted in M&A contracts with the aim of protecting the parties involved from the costs and efforts incurred throughout the process. These penalties are applied when one of the parties withdraws from the transaction between the signing and the closing.
The main objective of break-up fees is to mitigate risks related to the closing of the transaction, especially in cases involving approval by antitrust agencies, such as CADE, or when one of the parties refuses to close the transaction.
Although their use is not widespread, these clauses have a relevant history in emblematic transactions in Brazil, which can be seen in today's pill.
