In the case of an acquisition financing, a material adverse change condition precedent to lending that is virtually identical to the material adverse change clause in the acquisition agreement. It typically only pertains to the target company (not the buyer) and will contain the same exceptions as are customarily found in acquisition agreements (such as changes to the economy, financial markets or political conditions, changes to the borrower’s industry, laws or accounting standards or acts of war or terrorism).

Company MAC clauses are seen in acquisition financing commitment letters for financial sponsors. They are intended to give the seller greater certainty that the lenders will fund on the closing date of the acquisition (if there has been no MAC under the acquisition agreement) since the definition of material adverse change that forms a condition precedent to lending is the same as that for the acquisition. Company MAC clauses are only relevant on the closing date. After the acquisition has occurred and the seller is no longer involved in the transaction, the traditional material adverse change clause is used in loan agreements.

For more information, see Standard Clause, Commitment Letter: Company Material Adverse Change Clause and Practice Notes, Sponsor/Lender Negotiating Issues in Acquisition Finance and What's Market: Commitment Letters.