Bennett Jones
Byron Tse comments in CBA National on what the pandemic has meant for M&A.
On material adverse change (MAC) clauses - "A high standard is placed on invoking (a MAC clause). Say the value of a company up for M&A has plummeted over the course of the pandemic. Where will it be in three months' time, six months? Industry cycles do not qualify as material change. Right now, the clients I've talked to are holding firm. There doesn't seem to be a slew of lawsuits coming down, people aren't invoking MAC clauses, and everyone's just going on a week-by-week basis."
On the market uncertainty the pandemic has created - "Any sort of leveraged buyout involving significant debt load is likely to be on pause because the banks are just under too much pressure. Cash is king right now."
"There are always going to be people sniffing around for a good deal. What's holding them back right now is the volatility. They're waiting to see what happens with government bailouts. They're waiting for evidence of recovery, of light at the end of the tunnel. Commodity prices need to recover, for instance. Warren Buffett may have an opinion. I don't. This situation is completely unprecedented — too hard to predict."