A Material Adverse Change (MAC) or Material Adverse Effect (MAE) clause allows a buyer to withdraw from or renegotiate a transaction if, between signing and closing, a significant and adverse event affects the target's business, financial condition or prospects. Its precise scope — what events are included or excluded (pandemic, war, sector-wide downturn) — is a key SPA negotiation point. Courts interpret MAC clauses narrowly, requiring events that are substantial, long-lasting and specific to the target rather than market-wide. In M&A transactions, robust MAC drafting is critical for buyer protection without creating undue execution risk for the seller.

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Example: a MAC clause in a CHF 18.0 million acquisition explicitly excludes general economic downturns, currency fluctuations and sector-wide regulatory changes, while covering: loss of a client representing more than 20% of revenue, a major uninsured casualty loss, or criminal indictment of a key director. This balanced drafting protects the buyer from target-specific deterioration while avoiding easy invocation for market-wide events.

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Hectelion advises on MAC clause drafting to balance buyer protection with seller certainty in M&A transactions across French and Swiss law jurisdictions.