Series 79 practice questionmediumMaterial Adverse Change Clauses
Which of the following would most likely NOT be carved out from a typical material adverse change (MAC) clause in an acquisition agreement?
- AA loss of a major customer representing 30% of revenue✓ Correct answer
- BChanges in general economic conditions
- CActs of war or terrorism
- DIndustry-wide regulatory changes
Explanation
Why A — A loss of a major customer representing 30% of revenue
Carve-outs commonly exclude general factors like economic conditions or regulatory changes from triggering a MAC. However, a specific event like losing a key customer is usually not carved out, as it disproportionately impacts the target.
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