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ARTICLE · 23 DECEMBER 2022

Managing renegotiation and termination risk for target boards

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Recent deals have underlined the importance of managing MAC (material adverse change) and regulatory risk well.

AustraliaCorporate/Commercial Law
Sandy Mak
Sandy Mak
Adam Foreman
Adam Foreman
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While the past couple of years have been a target-friendly environment, with multiple bidders vying for target assets in a competitive market, 2023 promises to bring more uncertainty for target boards which will have to guard against opportunistic bids in a falling market. Additionally, even where target boards are eager to close a deal, market uncertainty and regulatory approvals may prolong completion timeframes, which exposes the target to ongoing material adverse change (MAC) and termination risks.

A number of deals this year have underlined the importance of managing MAC and regulatory risk well. Among them, the bid for Link Group by Dye & Durham, which ultimately did not proceed due to a fine being imposed by a foreign regulator that allowed the bidder to terminate the deal under a MAC condition.

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