When Can Buyers Walk? The Material Adverse Change Clause
New York, New York
6 December 2007
Hosted By: NERA Economic Consulting
In large corporate acquisitions, the period between the execution and closing of an agreement can often last for months, during which many things can happen. While most purchase agreements include price adjustment mechanisms to account for some changes in value occurring during this interim, a material adverse change can have far more reaching impact. A good example is Johnson & Johnson's threat, in 2005, to walk away from a proposed $25 billion acquisition of Guidant because Guidant suffered a material adverse change. The Material Adverse Change clause, or MAC (and its exceptions), is one contractual device for allocating such risks.
To examine these risks from an economic standpoint, NERA presented another in our series of complex commercial litigation seminars for senior corporate counsel and seasoned general business litigators. On 6 December 2007 in New York City, Dr. Victor Goldberg, Special Consultant to NERA and Jerome L. Greene Professor of Transactional Studies at Columbia University, delivered a presentation that considered recent Delaware case law, which has set a high bar for buyers. Dr. Goldberg focused his remarks on the rationale for the MAC, the limitations imposed by the exceptions, and how these factors should impact potential litigation. William Savitt, a Partner at Wachtell, Lipton, Rosen & Katz, served as commentator.
To learn more, please visit: ccl.nera.com.
To contact us about this event, please click here.
