Material Adverse Change (MAC) Clauses

Material Adverse Change (MAC) clauses are provisions in contracts, especially in mergers or financing, that allow a party to back out or renegotiate if a significant negative development occurs in the target company or assets. These clauses protect parties from unforeseen events that could substantially harm the value or operations, such as economic downturns, legal issues, or major losses. Essentially, a MAC clause sets a threshold for what constitutes a serious enough change to justify altering or terminating the agreement, ensuring parties are not locked into deals affected by unforeseen, adverse circumstances.