Negotiating Material Adverse Change Clauses

Securing Favorable Purchase and Merger Deal Terms Through Sound MAC Clauses

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

Conducted on Tuesday, June 24, 2008

Course Materials


The credit market crisis has pushed buyers and lenders in 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.

Over the past year, questions about what constitutes a material adverse change have been at the center of several disputed deals, triggering a number of lawsuits. Despite the litigation, courts still have not provided clear guidance on the issue.

Listen as our panel of attorneys discusses current trends surrounding MAC clauses and best practices for securing forward-thinking deal terms through sound MAC clauses.



  1. MAC clauses — current trends
    1. Recent settlements
    2. Pending lawsuits
    3. Current state of case law
  2. Common elements of MAC clauses, including exceptions
  3. Best practices for drafting and 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
  4. 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 reviewed these and other key questions: 

  • How has the recent trend of lawsuits impacted negotiation of MAC clauses?
  • What is the current state of the law regarding MAC clauses?
  • How can counsel for buyers and sellers best mitigate risk when drafting and negotiating MAC clauses?


G. Thomas Stromberg
G. Thomas Stromberg
Partner, Corporate and Finance Law
Kaye Scholer

He is very familiar with the legal aspects of FAS 157. At the firm, his specialties include M&A, private equity,...  |  Read More

Vincent P. (Trace) Schmeltz, III
Vincent P. (Trace) Schmeltz, III
Dewey & LeBoeuf

He litigates merger and acquisition disputes, pursuing and defending claims on behalf of corporations. He represented...  |  Read More

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

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