Panellists at IFLR’s Asia M&A Forum on Tuesday
agreed that material adverse changes (Macs) are rarely
triggered, despite their popularity. The speakers favoured
protection mechanisms involving payment, such as deposits.
Deal protection is a focus in Asia, due to many
factors including warranty and indemnity concerns, domestic
regulatory regimes and general counterparty risk.
Questions remain about the enforceability of Macs
both in the region and globally. As such, panellists
recommended parties protect themselves with more specific
– and enforceable – measures, such as
deposits and break fees.
An increasing number of parties to Asian M&A are
looking to deposits and break fees versus more contractual deal
protections such as Macs;Buyer-paid deposits
are becoming more popular, which highlights Asia’s
seller-driven market;Break fees may also
incentivise a party to get a deal done;Macs