In an adviser engagement, a break-up or termination fee may be payable when the seller ends the mandate or a specified event prevents the transaction from completing. The trigger and calculation depend on the contract.
The same term can also be used for a payment between parties to a transaction. Check whose obligation is being described before comparing clauses.
For an adviser mandate, ask whether the charge applies if the buyer withdraws, if a condition fails or if the seller terminates because of an issue with the adviser’s work. Check how it interacts with retainers, expenses and any continuing success-fee entitlement.
Clarify the circumstances in the written engagement before signing; the label does not establish when a charge is enforceable or payable.