Series 79 practice questionmediumMaterial Adverse Change Clauses
In a merger agreement, a Material Adverse Change (MAC) clause typically will NOT allow the buyer to terminate the deal due to which of the following?
- AUnexpected regulatory changes impacting the industry
- BA significant loss of a major customer by the target
- CGeneral changes in economic or capital market conditions✓ Correct answer
- DDiscovery of undisclosed financial fraud in target’s reporting
Explanation
Why C — General changes in economic or capital market conditions
General economic or capital market changes are typically carved out from MAC clauses, so they don’t allow for termination. This prevents buyers from backing out due to ordinary market volatility.
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