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 ?
By February 2009 it was announced that employees' bonuses would be reduced by 90%, relying on a material adverse change clause which had been introduced following the announcement of the bonus pool.
In practice, the ability of banks to suspend new loans when the borrower's financial condition is deteriorating by virtue of a material adverse change clause can be important.
It will rank on par with Walt Disney's existing debt, be subject to an interest coverage test of 3x and contain no ongoing material adverse change clause, the agency noted.
Grech, Comment, "Opting Out": Defining the Material Adverse Change Clause in a Volatile Economy, 52 EMORY L.
The code requires carriers to include a material adverse change clause, which states that carriers cannot modify the terms of a user agreement, especially if the terms are not in the customer's favor, without providing advance notice and at least 14 days for customers to cancel their contracts without incurring a fee.
The material adverse change clause turned out to be the most difficult negotiation in our banking relationships.
The right to tap a line of credit in the wake of a disaster involves amendments to the material adverse change clause normally found in credit agreements.
The facility includes a material adverse change clause, change of control provision, cross default ($25 million), minimum fixed-charge coverage ratio and maintenance of certain ratios related to the sold receivables.
According to testimony by Ken Lewis to the New York Attorney General, he was pressured by Fed Chairman Bernanke and former Treasury Secretary Paulson to not disclose the huge losses at Merrill Lynch and not invoke the material adverse change clause in the agreement in order to get out of the deal.
The revolver does not contain a material adverse change clause.
The facility includes a material adverse change clause, change of control provision, cross default ($25 million), minimum fixed charge coverage ratio and maintenance of certain ratios related to the sold receivables.
It also offers a 30-day early rate lock with no Material Adverse Change clause.
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