Series 79 practice questioneasyMaterial Adverse Change Clauses
Which of the following would most likely NOT be considered a Material Adverse Change (MAC) under a standard acquisition agreement clause?
- AA sudden loss of a major customer unique to the target
- BA general economic downturn affecting all industry participants✓ Correct answer
- CThe discovery of a significant accounting fraud at the target
- DThe loss of a key patent critical to the target's products
Explanation
Why B — A general economic downturn affecting all industry participants
General economic downturns are commonly carved out from MAC clauses, meaning they generally do not allow the buyer to walk away. This prevents a buyer from avoiding closing due to broad market conditions rather than target-specific issues.
Turn it into reps
Reading one answer is not the same as being ready
Lucky the Banker is a free practice app with 995+ Series 79 questions, weak-area tracking, and timed mock exams. No credit card, no paywall.
Spot an error in this question or explanation? Tell us — we fix these fast.
Related M&A, Tender Offers & Restructuring questions
- A minority shareholder who dissents from a squeeze-out merger in Delaware and properly perfects appraisal rights is…
- A merger agreement provides for a cash and stock mix, where each target share will be exchanged for $10 in cash plus…
- Which anti-takeover defense involves a target company seeking a friendly third-party acquirer to prevent a hostile…
- A controlling shareholder in a Delaware corporation executes a short-form merger to acquire the remaining 5% minority…
- A proposed acquisition valued at $120 million (2019 thresholds) between two companies passes the size-of-transaction…
- In an asset purchase, what is the main tax advantage for the acquirer compared to a stock purchase?
- In a triangular merger, who becomes the surviving entity?
- Under the all-holders/best-price rule, which of the following is required in a tender offer?