Why MAC clauses are no Covid-19 silver bullet

Author: Karry Lai | Published: 25 Mar 2020

The uncertainty brought by Covid-19 is already filtering through to private equity (PE) and M&A deals. As buyers look to protect themselves against unexpected changes, they will be making increasing use of material adverse change (MAC) clauses in negotiations.

"In my experience deals haven’t been called off because of Covid-19, but there have been delays because of the inability to travel," said Peter Wittmann, managing director at private equity firm Asia-IO. "Consumer sector deals have been much more heavily affected and we’re seeing the impact right away, but things aren’t looking so bright for the rest of the year."

He added: "The impact of the virus may be short term, which means many PE deals – which focus more on the longer term – can proceed, and continue to look ahead for the next two to three years."

While the situation in China is improving and the...