June 14, 2019
A Torys-authored piece on MAC clauses in M&A was featured by PE Hub Canada.
PE Hub Canada published the piece, written by Laurie N. Duke, Andrew Gray, Stephen Neil and Sophie Courtois, which provides guidance on performing M&A transactions in light of new regulations and at what point you can still walk away pre-closing.
A small excerpt from the article is below.
No matter the rigor of pre-signing due diligence efforts, once the dust has settled post-signing, buyers tend to be faced with one surprise or another about their newly acquired business no matter the rigor of pre-signing due diligence efforts. Buyers routinely negotiate for protections to address these circumstances, including comprehensive representations and warranties, indemnification clauses and purchase price escrows or holdbacks.
However, in some instances, events may transpire between the signing of the purchase agreement and the closing of the transaction that go beyond a mere surprise and have the effect of so negatively impacting the target business that a buyer may wish to walk away from the transaction. In such cases, a buyer will typically only be able successfully abandon a transaction if it can demonstrate that the target has experienced a material adverse change, and key to doing that is the question: what is “material”?
This piece forms a part of Torys’ Transaction Tips series, which shares insights on successful dealmaking.
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