Glossary · Legal

MAC clause (Material Adverse Change)

A MAC clause (Material Adverse Change) gives the buyer the right to walk away between signing and closing: without break-fee: if a pre-defined material adverse change occurs in the target or the broader economy.

Definition

In Benelux SME deals there are typically 4-12 weeks between signing and closing: time for regulatory clearance, financing confirmation and any third-party consents. The MAC covers the risk that the world changes during this window.

Two types: company-MAC (deterioration specific to the business: loss of major customer, key supplier insolvency) and market-MAC (general economic crisis, pandemic, war). A well-negotiated MAC includes carve-outs: industry-wide events, market movements, COVID-like pandemics: these should NOT trigger a MAC because that's grossly unfair to the seller.

Worked example

During COVID-19 (March 2020) the MAC clause was tested in countless Belgian and Dutch deals. General conclusion: pandemics as such were NOT a MAC unless specifically named: but business-specific deterioration (customer insolvencies, cancelled orders) was. Many deals were renegotiated rather than walked away from.

When it matters

Sellers fight for narrow MAC (company-only, with carve-outs for market events); buyers want broad MAC (including market-MAC, no carve-outs). The final clause mirrors negotiating power. In Benelux practice a balanced MAC = company-MAC + carve-outs for market-wide events.

Read: binding vs non-binding LOI

Frequently asked

What does "material" deterioration actually mean?: Usually defined as a deterioration that durably reduces EBITDA or equity value by more than X% (typically 10-20%). The word "durable" is critical: temporary shocks do not count.
How long is the MAC window?: From signing to closing: typically 4-12 weeks in a Benelux SME deal. Longer if regulatory clearance is needed (EU merger control can take 3-6 months on large deals).
What if I refuse to accept a MAC as seller?: Possible, especially in competitive auctions. Requires strong leverage or a short signing-to-closing window. Alternative: financing-MAC (seller responsible for its own performance only, not for buyer-side financing falling through).
Has a MAC ever genuinely triggered a walk-away?: Rarely: usually renegotiation. In the Benelux no MAC walk-away during COVID-19 was upheld in arbitration or court without a specified pandemic trigger.

Related terms

Letter of Intent (LOI)- A Letter of Intent is a typically non-binding term sheet capturing the headline commercial…
Earn-out dispute- An earn-out dispute is a conflict over the calculation or payout of an earn-out:…

Definition

Worked example

Frequently asked

What does "material" deterioration actually mean?

Usually defined as a deterioration that durably reduces EBITDA or equity value by more than X% (typically 10-20%). The word "durable" is critical: temporary shocks do not count.

How long is the MAC window?

From signing to closing: typically 4-12 weeks in a Benelux SME deal. Longer if regulatory clearance is needed (EU merger control can take 3-6 months on large deals).

What if I refuse to accept a MAC as seller?

Possible, especially in competitive auctions. Requires strong leverage or a short signing-to-closing window. Alternative: financing-MAC (seller responsible for its own performance only, not for buyer-side financing falling through).

Has a MAC ever genuinely triggered a walk-away?

Rarely: usually renegotiation. In the Benelux no MAC walk-away during COVID-19 was upheld in arbitration or court without a specified pandemic trigger.