A Material Adverse Change Clause (often “MAC” or “MAE”) is a provision in a purchase agreement that allows a buyer to refuse to close (or renegotiate) if the target suffers a material adverse change between signing and closing, subject to negotiated exceptions. In M&A, a Material Adverse Change Clause is heavily negotiated because it allocates interim business risk, and courts interpret Material Adverse Change Clause language narrowly based on facts and drafting.
