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
Galil, MAC Clauses in a Materially Adversely Changed Economy, 2002 COLUM.
MAC clauses have thus given rise to more litigation than any other provision of merger agreements, and the amounts in controversy in such cases have often been spectacular.
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.
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.
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.
MAC clauses are common phrases inserted into loan agreements to provide lenders some degree of protection against an adverse change in a borrower's circumstances, either economic or business in nature.
commercial paper (CP) program is fully backstopped by committed credit facilities, with no MAC clauses, although the Canadian CP program is only required to be covered at a 75% level.