Jurisdiction(s):
United Kingdom

Key definition

Material adverse change definition

What does Material adverse change mean? A material adverse change (MAC), also called a material adverse effect (MAE), describes a serious, lasting deterioration in a party’s business, assets, financial condition, operations, prospects, or ability to perform its obligations. It is not defined by statute; rather, it is a contractual concept used across finance, capital markets and M&A, typically as an event of default in loan agreements, a condition to completion, or a representation and warranty that no MAC has occurred. Courts in England and Wales, Scotland, Northern Ireland and Ireland generally construe MAC clauses narrowly. The party relying on a MAC must show a significant, objective and...

Material adverse change clauses in finance: leading cases on interpretation, materiality, financial condition and acceleration

Published by a LexisNexis Banking & Finance expert

Practice notes

This Practice Note summarises notable cases and related materials concerning Material adverse change clauses (MAC) in a financing context. The cases are arranged by theme and cover:

interpreting a MAC clause
Acceleration based on a MAC clause

Interpreting a MAC clause

Names of parties: BM Brazil I Fundo De Investimento EM Participacoes Multistrategia v Sibanye BM Brazil (Pty) Limited [2024] EWHC 2566 (Comm)
Judgment date: 10 October 2024
Case summary: Following drilling that triggered a blast, a mine slope in Brazil shifted by up to two metres, with the ground moving as a single block. The central issue was whether this amounted to a ‘material adverse effect’ under the definition in the share purchase agreement for the company owning the mine, allowing the buyer to withdraw. Butcher J concluded it was not a ‘material adverse event’ because, in the context of the acquisition, the change was not material. To reach that conclusion, he relied on expert valuation evidence and applied a percentage diminution test to the equity value of the target company.
Relevant content: Percentage reduction test applied to target equity value based on expert valuation evidence.

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Web page updated on 21/05/2026

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