Today is changing definitions and use of standard provisions in deal making. M&A ssmall business need-to-know
Excerpt…….Regardless of the state of the deal market, Material Adverse Effect, or MAE/MAC, provisions remain among the most hotly contested negotiating points for dealmakers. Contemporary purchase and merger agreements almost invariably contain some form of an MAE, defined generally as events or changes that have (or, in some cases, would or could reasonably be expected to have) a material adverse effect on the target company, subject to negotiated exceptions. MAE clauses typically serve two main purposes — they are used to qualify representations and warranties (and in some cases, covenants), and act as a condition to closing for the benefit of the buyer (i.e., the buyer is not required to close if the target has suffered an MAE between signing and closing).
While the basic concept and usage of MAEs have remained largely unchanged over a number of decades, the fluctuating fortunes of the M&A markets over the past ten years have resulted in some now-standard bells-and-whistles being added to the basic definition