Company MAC

Definition:

A contractual clause defining when a Material Adverse Change (MAC) has occurred in relation to a company. Company MAC clauses are commonly seen in commercial contracts and may give rise to a variety of rights to the counterparty, most typically termination.

In the context of an acquisition, this type of clause typically allows a purchaser to abandon a transaction, without penalty, if the Target suffers from a Company MAC between signing and Closing.

In the context of a Credit Agreement, a Company MAC will be used in a variety of contexts so as to allow the lender to call a default where the borrower’s financial performance (or external events) makes the loan too risky.

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