MAC Clause (Material Adverse Change)

The MAC clause (Material Adverse Change) is a contractual protective provision that grants the buyer a right to withdraw or to adjust terms if a material adverse change occurs at the target company between signing and closing. It allocates the risk of unexpected events during the completion phase between the parties.

The clause typically defines which events qualify as material – for instance significant revenue declines, the loss of key customers or regulatory intervention. General market changes, sector-wide risks and macroeconomic developments are often expressly excluded, as they cannot be attributed to the seller. The precise wording is regularly one of the toughest negotiation points.

A careful due diligence reduces the need for far-reaching MAC clauses, as many risks are already identified and reflected in the purchase price. In our M&A advisory, we negotiate MAC clauses so that they provide effective protection without unnecessarily endangering deal certainty.