The Long Arm of the MAC
The Harvard Law School Forum on Corporate Governance and Financial Regulation 2017-07-13
Dealmakers have long recognized the implications of a Material Adverse Effect (MAE/MAC) standard in a merger agreement. As the Delaware court noted in the Hexion case, a buyer asserting an MAC condition “faces a heavy burden when it attempts to invoke a material adverse effect clause in order to avoid its [contractual] obligation.”
In a recent Delaware case involving chocolate chip cookies, Chancellor Bouchard extended the reach of the MAC jurisprudence in assessing the termination of a license agreement between Mrs. Fields and Interbake.