Series 79 practice questioneasyMaterial Adverse Change Clauses
In a typical acquisition agreement, a material adverse change (MAC) clause allows the acquirer to terminate the deal if:
- AInterest rates rise nationwide
- BA competing bidder emerges
- CA significant event disproportionately affects the target company✓ Correct answer
- DThe acquirer’s stock price falls by more than 20%
Explanation
Why C — A significant event disproportionately affects the target company
A MAC clause is meant to address situations where the target suffers a significant, company-specific adverse event. Traps include confusing general economic issues or unrelated events with true MAC triggers.
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