Examines material adverse effect clauses in M&A transactions, explaining their purpose, providing drafting suggestions and highlighting key case law.

A material adverse effect is typically considered to be an extremely high threshold and the definition in the acquisition agreement often carves out certain widespread events (such as terrorism). The scope of the definition (and its exceptions) depends on the type of transaction, industry and negotiating power amongst the parties.

As a means of qualifying certain representations and warranties, covenants and other terms of the finance documents, so that a particular provision will only be breached if the default will have (or, sometimes, is likely to have or reasonably likely to have) a "Material Adverse Effect".

Material Adverse Effect means a material adverse effect of any act or event on the ability of either Party to perform any of its obligations under and in accordance with the provisions of this Agreement and which act or event causes a material financial burden or loss to either Party;

2018年5月25日 · A “Material Adverse Effect” is a common clause found in purchase agreements that impacts a deal’s closing and can have significant benefits for either Sellers or Buyers, but only if it’s written correctly.

A material adverse effect (MAE) or material adverse change (MAC), or material adverse event (MAE) refers to a specific happening that decreases the value of an entity or interest toward a matter under consideration.

2024年12月4日 · Sibanye BM Brazil (Pty.) Ltd., is the latest judicial pronouncement by a common-law court on the meaning and effect of a material adverse effect (“MAE”) clause.

2021年4月22日 · In a paper forthcoming in Business Lawyer, I propose a new, systematic understanding of material adverse effects that resolves the major outstanding problems in the Delaware caselaw on MAEs.

a material, long-term impact. For example, the Delaware Chancery Court has found a decline in the target’s EBITDA of 3 percent did not constitute an MAE, while in Raskin v. Birmingham Steel, the Chancery Court noted that a 50 percent decline in earnings over two consecutive quarters likely constituted an MAE. In New York, in Pan Am Corp. v.

Material Adverse Effect means any event, condition or change which materially and adversely affects or could reasonably be expected to materially and adversely affect the assets, liabilities, financial results of operations, financial conditions, Business or prospects of the Company.