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Corporate Finance & M&A

Material Adverse Change

Also called: MAC clause, MAE, material adverse effect

A material adverse change clause lets a buyer walk away if something seriously damages the target between signing and closing. Courts interpret it extremely narrowly — a downturn affecting a whole industry usually doesn't count, and the bar has been described as durationally significant rather than merely large. Successful MAC invocations are rare enough that each one is studied as a landmark.

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