A guide to the use of significant negative amending clauses in M-A Unfortunately, what constitutes a significant adverse change is not clear. According to Latham-Watkins, the courts challenging MAC claims focus on whether the overall potential (or EBITDA) is significantly compromised compared to past performance are not predicting. The threat to EBITDA is generally measured on the basis of a reasonable buyer`s long-term perspective (years, not months), and the buyer bears the burden of proof. MAC clauses can perform various functions in the share purchase agreement. First, the MAC clause may set a precedent for the purchaser to divest itself of the agreement if a material adverse change occurs between the signature and the conclusion. Similarly, the MAC clause can instead be used as a representation and guarantee at the time of the closure, which explicitly states that no significant negative changes have been made to the closure or closure. Sometimes MAC clauses are also used to qualify the seller as insurance and guarantees, i.e. only insurance and warranty breaches, which constitute a significant negative change, are subject to the corrective measures agreed in the share purchase agreement. (1) the wording of the MAC clause: To the extent that it might be relevant: In Ipsos S.A. (Ipsos) /Dentsu Aegis Network Limited (Aegis)  EWHC 1726, the High Court considered whether a change in the profit forecasts of a target company could have a significant negative effect (MAE) in the BSG that does not allow the purchaser to complete the transaction.
This decision is one of three measures taken to date regarding Ipsos` acquisition of Synovate from Aegis by Ipsos. Finally, the purchaser of Ipsos S.A. sued Dentus Aegis Network Limited  EWHC 1171 for breach of the warranty. The seller successfully sought acceptance of the application or, alternatively, a summary judgment against the purchaser, as the notification had not been notified in accordance with the G.S.O. However, in order to assess whether these circumstances may allow the purchaser to avail itself of the application of the MAC clause and related remedies, it is necessary to assess on a case-by-case basis the content of the clause agreed upon by the parties. (2) Duration: The longer the likely duration of the COVID 19 epidemic and the restrictions imposed by COVID 19 measures, the greater the harm (of the buyer and target entity) and the greater the possibility of availing itself of the application of the MAC clause and the related remedies.