Bryan Haynes appears live on BNN Bloomberg to discuss the rules around material adverse change (MAC) clauses to allow companies to walk away from deals. He says for a company to walk away, "The hill is steep, and it's an uphill battle."
Bryan says in many MAC clauses, "there are exceptions. One of those is natural disasters and acts of God . . . arguably, the pandemic constitutes a natural disaster or an act of God. So it's an exclusion to the material adverse change clause. So unless the buyer has negotiated an exception to the exception, then likely, the buyer will have a hard time and an uphill battle in escaping their obligations to close a transaction."
"The other challenge for buyers is that the courts have established a very high bar, a very high burden for buyers to walk away from deals. And the onus of proof is on the buyers, and one of those tests is that the target business has been disproportionately impacted by the material adverse change event relative to its industry peers."