Material Adverse Change In M&A Agreements

Preface

In a merger and acquisition agreement (M&A) there is a relatively minor clause, but with dramatic consequences. The MAC clause (Material Adverse Change) is a clause intended to settle the risks between the parties that may emerge in relation to the acquired corporation and/or the assets purchased between the signing date and the closing date. Thus, the parties must reach an agreement regarding the nature of the changes that may occur in the aforementioned schedule, which may influence the transaction's price, in order to determine who among the parties will bear the aforementioned risks, which may, in extreme scenarios, lead to the termination of the transaction by the purchaser.