Mergers & Acquisitions

Resources: Glossary

Don’t be confused or intimidated by any terms or abbreviations in the M&A world. You’ll find answers here.

Material Adverse Change (MAC)


A legal provision found in a letter of intent or purchase agreement that enables the acquirer to back out of the transaction if the seller suffers adverse events before the closing.


Example of a Material Adverse Change clause in a purchase agreement: “Material adverse effect means any event, change, circumstance, effect, or other matter that has, or could reasonably be expected to have, either individually or in the aggregate with all other events, changes, circumstances, effects or other matters, with or without notice, lapse of time or both, a material adverse effect on (a) the business, assets, liabilities, properties, condition (financial or otherwise), operating results, operations, or prospects of the acquired companies, taken as a whole, or (b) the ability of the company or the seller to perform its obligations under the agreement or to consummate timely the transactions contemplated by the agreement.”

See Also

Purchase agreement.


MAC clauses developed after the 2008-2009 financial crises and were common in purchase agreements in the middle market by corporate acquirers and private equity groups. The MAC clause protects the purchaser from catastrophic external events in the industry or the broad economic environment.