Material Adverse Change Clauses in M&A Deals: Current Enforcement Trends

Lessons on the Use and Interpretation of MAC Clauses From Hexion v. Huntsman and Other Recent Delaware Decisions

Economic crisis jeopardizes merger and acquisition deals

Recording of a 90-minute premium CLE webinar with Q&A

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Conducted on Thursday, April 30, 2009

Course Materials

This seminar will discuss current trends amid the economic crisis that surround the use and interpretation of material adverse change (MAC) clauses. The panel will offer their strategies for negotiating and litigating MAC clauses in merger agreements.


The economic crisis has pushed buyers and lenders in many purchase and merger agreements to seek ways to escape deals without penalty. Material adverse change (MAC) clauses, which permit the cancellation of a deal under certain circumstances, have become a common, though contentious, exit strategy.

Questions about what constitutes a material adverse change have been at the center of several disputed deals, triggering a number of lawsuits. A September 2008 Delaware Chancery Court ruling provides meaningful guidance on the interpretation of MAC clauses in merger agreements.

The Delaware decision, Hexion Specialty Chemicals v. Huntsman Corp., provides significant direction to merger and acquisition (M&A) counsel on how courts will interpret MAC clauses in merger agreements.

Listen as our panel of experienced M&A attorneys and a litigator discuss current trends surrounding the use and interpretation of MAC clauses and strategies for negotiating and litigating MAC clauses in merger agreements.



  1. MAC clauses — current trends
    1. Hexion Specialty Chemicals v. Huntsman Corporation (September 2008)
    2. Recent settlements
    3. Pending lawsuits
  2. Best practices for negotiating MAC clauses
    1. Mitigating risks
      1. Be specific about conditions constituting MAC
      2. Use broadly written MAC clauses only as “backstop” protection
      3. Mention information relied on, such as business or financial projections
      4. Watch language construction
      5. Buyer should include potential adverse events outside of seller’s control
      6. Include broad language to cover unknown risks
      7. Seller should attempt to limit specific carve-outs buyer proposes
      8. Seller might require that it have knowledge of MAC for clause to be enforceable
    2. Resolving conflicting positions
  3. Dynamics of preparing and negotiating MAC clauses
    1. Expectations of MAC clauses
    2. When and how to use MAC clauses effectively
    3. Interrelationship of MAC clause with other clauses in merger agreement


The panel will review these and other key questions:

  • How has the recent trend of lawsuits impacted the negotiation of MAC clauses?
  • What is the current state of the law regarding MAC clauses?
  • What insights and guidance does Hexion offer on MAC clauses in merger agreements?
  • How can counsel for buyers and sellers best mitigate risk when drafting and negotiating MAC clauses?

Following the speaker presentations, you'll have an opportunity to get answers to your specific questions during the interactive Q&A.


Clifford E. Neimeth
Clifford E. Neimeth

Greenberg Traurig

He has over 22 years of experience structuring, managing, negotiating and executing merger and acquisition...  |  Read More

G. Thomas Stromberg
G. Thomas Stromberg

Kaye Scholer

He concentrates in mergers and acquisitions, private equity, joint ventures, corporate finance, and corporate...  |  Read More

Herbert F. Kozlov
Herbert F. Kozlov

Reed Smith

His practice focuses on corporate law, including public and private mergers, acquisitions and divestitures. He also has...  |  Read More

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