Recent market fluctuations have led some acquirers in the US
to try and pull out of deals by looking closely at their
material adverse change (Mac, also referred to as material
adverse effect or MAE) clauses to see if such a move can be
justified without a punitive fee. Mac clauses can be
complicated and ambiguous, as demonstrated by two recent cases
in the US. A few simple tips can help mitigate this
A volatile cocktail has fuelled the M&A boom over the
past five years, composed of record inflows of private equity
capital, low interest rates and easy credit terms.
Ever-increasing amounts of capital chased a limited number of
quality acquisition targets, and sellers held the power in
negotiations. To win the hand of their desired targets, suitors
not only had to offer generous price terms; they also had to
confirm that the union would be consummated, by...