Material Adverse Change or Effect

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Material Adverse Change or Effect

Many mergers and acquisitions contracts include a material adverse change clause that allows a company to renegotiate or walk away from a deal if the other company or its subsidiaries announces a significant event that may negatively affect its stock price or operations. See also materiality.

Material Adverse Change or Effect

A clause in some merger and acquisition contracts allowing the acquiring to cancel a deal before it is finalized if material information is revealed that negatively impacts the target company's stock price. See also: Due diligence.
References in periodicals archive ?
MAC clauses remain relatively rare in Europe (14% of deals): this ensures seller deal certainty.
MAC clauses are one such way to attempt to avoid the payment of a termination fee.
MAC clauses, because they have been interpreted the way they have, you need them but no one should engage in over-reliance on them.
suggest that future MAC clauses will adopt thresholds in readily proven
In the past two quarters, lenders have relied upon MAC clauses to change the credit spread, and thus the coupon, after a borrower had rate locked.
Covenant restrictions on the revolver are light and exclude MAC clauses or ratings triggers.
MAC clauses - the proportion of deals with a MAC clause remained unchanged at 14% in 2013 and remain rare in Europe compared with the USA where most (94%) of deals have MAC clauses.
In the next edition of Banker Middle East, two years on from the grim days of September 2008, Rodgin Cohen talks about whether Lehman should have been allowed to fall, his views on M&A and MAC clauses and offers the readers of Banker Middle East a few suggestions on what can be done to create a stronger global banking system.
For example, MAC clauses are much more popular in the US (being used in 93% of deals) than in Europe where they only appear in 14%.
More than 90 percent of private equity practitioners inserted additional MAC clauses due to the turmoil in the credit markets, while only 35 percent of corporate executives added clauses for this reason.
Insistence by buyers that their contracts contained MAC clauses was in decline until just recently," says Mr.
As a result, it is possible that the change in financial results could result in some lenders wanting to exercise their MAC clauses and to exit the credit, although this risk seems low and minimal immediate funding impact.