The economic crisis has pushed buyers and lenders in many purchase and merger agreements to seek ways to escape deals without penalty. Material adverse change (MAC) clauses, which permit the cancellation of a deal under certain circumstances, have become a common, though contentious, exit strategy.

Questions about what constitutes a material adverse change have been at the center of several disputed deals, triggering a number of lawsuits. A September 2008 Delaware Chancery Court ruling provides meaningful guidance on the interpretation of MAC clauses in merger agreements.

The Delaware decision, Hexion Specialty Chemicals v. Huntsman Corp., provides significant direction to merger and acquisition (M&A) counsel on how courts will interpret MAC clauses in merger agreements.

This seminar discussed current trends amid the economic crisis that surround the use and interpretation of material adverse change (MAC) clauses. The panel offered their strategies for negotiating and litigating MAC clauses in merger agreements.

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