How do you assess the risk of a MAC clause being triggered, and what are the key factors that courts consider when determining whether a MAC has occurred?
An advanced M&A Advisory question — expect it in final rounds and case-heavy interviews (IB, PE, Big-4 Transaction Services).
THE SHORT ANSWER
I assess MAC risk by analyzing industry trends, company-specific events (e.g., loss of key customer, regulatory change), and macroeconomic shocks. Courts consider: the duration and severity of the adverse change, whether it disproportionately affects the target vs. peers, and if it was foreseeable. A MAC clause typically excludes general economic or industry downturns unless they have a material disproportionate effect. The burden of proof is on the acquirer to show a MAC occurred.
WHAT INTERVIEWERS LISTEN FOR
- ✓Analyze industry, company, macroeconomic risks
- ✓Court considers duration, severity, disproportionality
- ✓Excludes general downturns unless disproportionate
- ✓Burden on acquirer
COMMON MISTAKES
- ✗Assuming any negative event triggers MAC
- ✗Ignoring exclusion clauses for general downturns
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