![]() ![]() ![]() That is because it is in the best interest of a buyer in an M&A transaction that its M&A MAC and its Acquisition Finance MAC closely parallel each other a buyer wants both tests to be triggered simultaneously.Īcquisition Finance MAC language is fundamentally different from Finance MAC language. MAE or MAC language in the M&A MAC and the Acquisition Finance MAC contexts is typically very similar. the Lender in an acquisition finance transaction has the ability to refuse to finance the acquisition by arguing that an MAE or MAC exists (the “Acquisition Finance MAC” and, together with the M&A MAC, collectively the “Acquisition MAC”).the buyer in a merger or acquisition (“M&A”) transaction has the ability to refuse to consummate the transaction by arguing that an MAE or MAC exists (“M&A MAC”), and.In addition to the extension of revolving credit, the MAE or MAC concept is common in two other scenarios: ![]() “Material Adverse Change” means a material adverse change in, or a material adverse effect upon, the financial condition, operations,, assets, business, or properties of the Loan Parties taken as a whole …” MAC in M&A versus MAC in Finance A customary Financing MAC definition will read, in part, as follows: Contract LanguageĪ typical MAE or MAC definition in a loan agreement will have multiple prongs this memorandum will address the business impact prong of the MAE or MAC definition in loan agreements (the “Financing MAC”). MAC or MAE as a condition to extensions of revolving credit is the focus of this memorandum. MAE or MAC definitions in loan agreements are typically used (i) to qualify or provide a threshold for certain representations and warranties, (ii) as a condition to the extension of revolving credit and (iii) as an Event of Default (although this final usage is far from what would be considered market). Access to credit is a question of paramount importance to borrowers navigating uncertain times, and as market participants work to assess the impact of COVID-19 on the broader economy, the question has arisen as to whether the pandemic has already triggered, or will soon be grounds for invoking, a Material Adverse Effect (“MAE”) clause or Material Adverse Change (“MAC”) clause. ![]()
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