Posted in Finance, Accounting and Economics Terms, Total Reads: 419
Definition: Deal Breaker
Refers to a problem, issue or situation which when left unresolved, leads to break down of discussions between 2 or more parties. A deal breaker might be a covenant or clause in a contract that defines a particular requirement or even the lack of such a covenant.
This is most applicable in cases where there are no repeat interactions between parties once terms are finalised and hence both parties have an incentive to not yield over certain issues and specifications as this is the only chance they can get what they want. The deal breaker allows them to manoeuvre negotiations and indentify sore points.
For example, the proposed financing structure of a project might be a deal breaker for prospective investors as it might not give them desired results.