Series 79 practice questionmediumMaterial Adverse Change Clauses
Which of the following would most likely NOT constitute a material adverse change (MAC) under a typical acquisition agreement?
- ALoss of a key customer representing 40% of revenue
- BDiscovery of accounting fraud at the target
- CUnforeseen regulatory ban on a major product line
- DGeneral deterioration of market conditions affecting the target's industry✓ Correct answer
Explanation
Why D — General deterioration of market conditions affecting the target's industry
MAC clauses typically carve out general industry or economy-wide effects, so general market deterioration is usually not grounds for invoking a MAC. The trap is selecting a company-specific event instead.
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