A look back on the MAC

The Material Adverse Change (or MAC) clause has been the subject of many a lawsuit this year in the private equity world, as buyers and sellers tussle over deal closings in tough markets. Not surprisingly, all parties are now taking more care in the drafting of these terms as a result. Nixon Peabody surveyed 528 deals that took place between 1 June 2007 and 31 May 2008, and found that MAC clause terms are becoming more buyer friendly as credit dries up and previously eager buyers are no longer in hot pursuit of deals. The following charts illustrate the percentage of the overall sample population, as well as the percentage of the top 100 deals by value, which included certain types MAC elements or MAC exceptions. Since the start of the credit crisis, MAC definitional elements have been slightly narrower, and buyers are permitting fewer exceptions.