Boston, MA. The mergers and acquisitions market remained active in 2021 and 2022, showing sustained acceptance of material adverse change (MAC) clauses in acquisition agreements amid continued global economic uncertainty and geopolitical volatility.
That’s according to Nixon Peabody’s 19th MAC Survey, which analyzes MAC clauses—exceptions in M&A deals relating to the political environment, international calamity, and the economy, among others. The MAC Survey provides a renewed opportunity to examine the market’s response to global and societal issues shaping how deals are made. Some of those issues include rising interest rates, fears of a global economic recession, the Russian invasion of Ukraine, and COVID-19.
The firm’s analysis included the review of publicly filed acquisition agreements for transactions with values in excess of $100 million dated between June 1, 2020, and May 31, 2022. The M&A market experienced record-breaking deal volumes of $5.5 trillion in 2021 and $4.7 trillion in 2022. The number of deals reported for both years also came in at historically high levels.
Nixon Peabody’s team of corporate attorneys reviewed 293 agreements filed with the U.S. Securities and Exchange Commission, which included asset purchase, stock purchase, and merger agreements. The surveyed transactions represent an expansive array of industries and range in value from $100 million to $43 billion. The team also analyzed 113 deals in the sample valued at $1 billion or more. While MAC clauses appear at a similar rate across industries, the survey found that they are more common in larger deals.
“While the frequency of these clauses in M&A agreements has remained consistent, this year, we’ve noticed relatively slight but noticeable shifts in the language included in the MAC definition and in MAC exceptions that favor bidders,” said Richard Langan, a partner in the firm’s Corporate practice and lead author of Nixon Peabody’s MAC Survey. “The M&A market may be poised to rebound later this year, but dealmakers are still expecting the unexpected. We’re seeing universal acceptance of MAC clauses in M&A documents, and these provisions are likely to become a permanent fixture in the market as we head into the future.”
Click here to request a copy of the complete 2023 MAC Survey and learn why it is a critical tool for capturing a more robust picture of the trends impacting M&A transactions.
