Jenner & Block

"Living in a Material World: The Evolution, Purpose, and Future of Material Adverse Change Clauses," Bloomberg Law Reports: Mergers & Acquisitions, Vol. 2, No. 25

Partner Ross B. Bricker, Associate Jodi K. Newman and former Associate Courtney M. Beemer address the history, purpose and judicial interpretation of the material adverse change (MAC) clause, a central and important term of most business merger and acquisition agreements. According to the authors, “it is a clause whose words and language have remained relatively consistent for decades, but that has undergone a sea change in judicial approach and interpretation.” The authors argue  that judicial assessment of a MAC clause, “once viewed" almost exclusively "under the objective prism of a reasonable buyer" has evolved to now also include a "deep dive into parties’ negotiations, diligence, knowledge and intent,” and that “careful and strategic documenting of a transaction and its MAC Clause provision " is "central to avoiding disputes.”