First Published in The Royal Gazette, Legally Speaking, February
2021
Given the ongoing impact of the Covid-19 pandemic, it is timely
for us to look closely at material adverse change clauses in the
context of a business acquisition.
Also known as material adverse effect clauses, MAC clauses are
designed to provide a way to address events that were unanticipated
in a deal's documentation.
In an agreement to buy a business, a MAC clause typically allows
a buyer to withdraw from an agreed transaction if events occur that
are detrimental to a target company and/or its assets. In so doing,
a MAC clause offers the buyer a level of protection against
significant adverse business or economic changes that impact the
value of the target company.
