14th Annual MAC Survey

December 16, 2015

Author(s): Philip B. Taub, Richard F. Langan, Jr., John C. Partigan, David A. Martland

We are pleased to present the findings from our 14th annual MAC Survey.

This year’s survey tracks the improved appetite for dealmaking and the effects of the economy’s continued revitalization.

For over a dozen years, Nixon Peabody has tracked the evolution of Material Adverse Change clauses in acquisition agreements. While these clauses have echoed market, societal, and economic shifts in our world during this period, our annual surveys look deeper to report the evolving power dynamics between bidders and targets in acquisitions.

Our inaugural survey, which covered 2001 to 2002, reflected the effects of the September 11, 2001, terrorist attacks on dealmaking. The next year’s study indicated a trend toward bidder-friendly MAC clauses during 2002–2003 and significant expansions of the exclusions focused on acts of terrorism and war and on broad-based market volatility. As economic activity picked up between 2004 and 2007, our surveys reported increasingly pro-target formulations with robust lists of exclusions. The economic downturn and credit crisis halted this pro-target trend, and our 2008 and 2009 surveys showed another increase in the negotiating strength of bidders through the marked decrease in the use of exclusions to MAC provisions. But as the nation began its climb out of the recession, our surveys from 2010 through 2012 signaled a return in target negotiating strength.

However, the ongoing economic recovery has been gradual, and our recent surveys note the cautious optimism of dealmakers. While our 2013 survey reflected increases in both pro-target and pro-bidder trends, the 2014 survey indicated the development of pro-bidder trends, which were continued in the 2015 survey.

As with all studies and research, the value is as much in the insight and interpretation as it is in the results. We hope you enjoy reading this year’s survey and that it helps your dealmaking strategies over the following year.

The foregoing has been prepared for the general information of clients and friends of the firm. It is not meant to provide legal advice with respect to any specific matter and should not be acted upon without professional counsel. If you have any questions or require any further information regarding these or other related matters, please contact your regular Nixon Peabody LLP representative. This material may be considered advertising under certain rules of professional conduct.

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