As someone who loves reading the fine prints of every document, this article discusses the the implications of having a Material Adverse Change (MAC) clause in privatization and restructuring agreements. The inclusion of an MAC gives the offeror the right but not the obligation to walk away from the deal if certain conditions are breached before the completion date. Usually, this involves a certain deterioration of financial performance, such as decreased revenue, net profit, or valuation of assets.

The MAC serves to protect the offeror/buyer, as the financial condition of the target company could have worsened between the time the offer was made, and the completion date of the transaction. If the financial performance of the target company has worsened materially, then it may not be worth as much as compared to the initial deal terms. Hence, the MAC clause serves to protect the offeror, giving them the option to