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Material Adverse Effects Contract Terms

Hogan Lovells

English High Court considers material adverse effect clause in SPA: the “revelatory event”

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Cases on Material Adverse Effect (“MAE”) clauses (also known as Material Adverse Change, or MAC, clauses) rarely come before the English courts, so there are limited English authorities on their construction. The High Court...more

Morrison & Foerster LLP

Top Commercial Disputes of 2024: What You Need to Know and What to Look Out for in 2025

As we begin 2025 and set our goals for the new year (realistic or unrealistic), we outline some of the significant English court rulings from 2024 and the key lessons they offer for the year ahead. In 2024, the courts...more

Mayer Brown

MAC/MAE clauses: English Commercial Court delivers guidance in the context of $1.2 billion mining dispute

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The English High Court has held that a geotechnical event ("GE") at a mine in Brazil did not engage the material adverse effect ("MAE") clause in an SPA, pursuant to which two mines in Brazil were being sold for $1.2...more

Goulston & Storrs PC

What's Market: The Materiality Scrape

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Over the past 15+ years covered by the ABA studies, materiality scrapes have morphed from being a somewhat uncommon provision, seen in about 14% of transactions in 2005, to something near-ubiquitous in M&A purchase...more

Nutter McClennen & Fish LLP

M&A in Brief: Q2 2023

Chancery Court Provides Additional Guidance on Disclosure Requirements for Corwin Analysis - One of the most significant decisions of the Delaware Chancery Court in the last 15 years was the court’s ruling in Corwin v....more

Farrell Fritz, P.C.

Inside the Merger Agreement between Elon Musk and Twitter

Farrell Fritz, P.C. on

In what seems like one of the speediest transaction processes ever for a deal of its size, Twitter agreed on April 25, 2022 to be acquired by Elon Musk for $54.20 per share or about $44 billion.  It all started with Musk...more

Dorsey & Whitney LLP

“Everything zen? Everything zen? I don’t think so...” - MAE Clauses in the Time of COVID

Dorsey & Whitney LLP on

On March 1, 2022, the Delaware Court of Chancery delivered a memorandum opinion ordering a yoga franchisor to complete the acquisition of its franchisee’s chain of yoga studios. The case arose out of the parties’ pre-COVID...more

Morgan Lewis

Global Healthcare Transactions Series: Impact of COVID-19 on Healthcare Mergers and Acquisitions in UAE

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The COVID-19 pandemic created many uncertainties and challenges for investors and operators alike across the Middle East, including in the United Arab Emirates, which is often considered a regional healthcare and business...more

White & Case LLP

Notable decisions from Delaware courts

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Bardy Diagnostics: Chancery confirms high bar for material adverse effect - The Delaware Court of Chancery was once again required to determine whether a potential buyer should be relieved of its obligation to acquire a...more

A&O Shearman

Summary Judgment in football broadcasting rights case: Premier League 1 - 0 PPLive

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The Premier League was awarded over USD 200m by way of summary judgment against PPLive in its case about football broadcasting rights during the pandemic. ...more

Pullman & Comley, LLC

10 M&A Trends Gleaned from the 2020 – 2021 ABA Deal Points Study

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The American Bar Association (ABA) 2020 – 2021 Private Target Mergers & Acquisitions Deal Points Study[1] analyzed publicly available acquisition agreements for 123 transactions executed and/or completed in 2020 and the first...more

Stikeman Elliott LLP

Cineplex Awarded $1.24 Billion in Lost Synergies from Failed Cineworld Acquisition: Company’s Pandemic Response Not Out of the...

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In a highly anticipated decision, the Ontario Superior Court of Justice – Commercial List held that Cineworld wrongly terminated its arrangement agreement to acquire Cineplex, which was awarded substantial damages....more

Gray Reed

The Pandemic is not a MAE; Is the Ordinary Course Covenant the New MAE?

Gray Reed on

Recent Delaware cases appear to make two things clear. First, it remains extremely unlikely that a court will find an event or occurrence to fall within the general provisions of a Material Adverse Effect condition and as a...more

Kramer Levin Naftalis & Frankel LLP

Sustained or Transitory? Delaware Court of Chancery Finds No MAE Absent Proof of Durationally Significant Effect on Business

Prior to the Delaware Court of Chancery’s opinion in Akorn, Inc. v. Fresenius Kabi AG, C.A. No. 2018-0300-JTL, 2018 WL 4719347 (Del. Ch. Oct. 1, 2018), aff’d 198 A.3d 724 (Del. 2018), no Delaware court had found the existence...more

Emmet, Marvin & Martin LLP

COVID-19 AND THE LAW: MAC/MAE Clauses in New York Credit Agreements

With the COVID-19 pandemic continuing to adversely impact businesses across the globe, for the past year lenders have been reviewing their portfolios for credit degradation. Credit agreements will often contain a clause in...more

Gray Reed

First Delaware COVID-19 M&A Decision

Gray Reed on

In AB Stable VIII LLC v. Maps Hotel and Resorts One LLC et al., the Delaware Court of Chancery has published its first ruling regarding whether or not the effects of the COVID-19 pandemic constitute a material adverse effect...more

Hogan Lovells

Quarterly Corporate / M&A Decisions Update: Q4 2020

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Below is our Quarterly Corporate / M&A Decisions Update for decisions in Q4 2020. This update is designed to highlight selected important M&A, corporate, and commercial court decisions on a quarterly basis. Brief summaries of...more

Cadwalader, Wickersham & Taft LLP

Bouncing Back January 28, 2021 | Issue No. 20 - English Courts Consider Material Adverse Effect Clause Invoked by the Effects of...

In the recent case of Travelport Ltd v Wex Inc [2020] EWHC 2670 (Comm) (the “Travelport Case”), the High Courts of England considered the construction of a material adverse effect clause (“MAE Clause”) in which a party sought...more

Farrell Fritz, P.C.

Seller Beware: “Ordinary Course” and “Material Adverse Effect/Change” in the Age of COVID-19

Farrell Fritz, P.C. on

In late November of last year, the Court of Chancery in Delaware handed down a decision in a case called AB Stable VIII LLC v. MAPS Hotels and Resorts One, LLC ...more

Latham & Watkins LLP

Delaware Court Nixes Deal Due to Seller’s Failure to Operate in “Ordinary Course” During COVID-19

Latham & Watkins LLP on

The decision leaves the door open for buyers to argue that inflexible ordinary course covenants can provide a basis to terminate a transaction in which a seller does not suffer an MAE. Key Points: ..The Delaware Court...more

Dorsey & Whitney LLP

Chancery Opinion Provides First Delaware Court Guidance on COVID-19’s Impact on MAE Provisions and Ordinary Court Course Covenants

Dorsey & Whitney LLP on

On November 30, 2020, Vice Chancellor Laster of Delaware’s Court of Chancery issued the first case where the pandemic provided a company with the ability to walk away from its contractual obligations in a sale transaction,...more

Dechert LLP

Delaware Court of Chancery Issues Major Decision on COVID-Related Issues in M&A Deals, Allows Buyer to Terminate Agreement for...

Dechert LLP on

In a late night, 242-page decision, the Delaware Court of Chancery ruled that the buyer in a purchase and sale agreement was relieved of its obligation to close and could terminate the agreement as a result of the changes...more

A&O Shearman

Material adverse effect clauses and Covid-19

A&O Shearman on

A Material Adverse Effect clause in an SPA excluded conditions resulting from a pandemic except where those conditions would have a disproportionate effect on the target companies as compared to companies in the “industries”...more

Williams Mullen

[Webinar] 2020 M&A Year in Review: Lessons Learned - December 15th, 11:00 am - 11:30 am EST

Williams Mullen on

In just about every way, the world turned upside down in 2020. Deals were no exception. Whether it was incorporating a PPP payoff or forgiveness into deal terms, drafting MAE, interim operating covenants and working capital...more

Goulston & Storrs PC

The ‘Materiality Scrape’ Provision What’s Market?

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Market Trends: What You Need to Know - Over the past almost 15 years covered by the ABA studies, materiality scrapes have morphed from being a somewhat uncommon provision, seen in about 14% of transactions in 2005, to...more

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