Publication | ThinkSet, issue 1

Beyond Cyber Fine Print in M&A Negotiation

Heiko Ziehms

Summer 2017

Like many merger and acquisition agreements involving US-based companies, the terms of Verizon Communications’ acquisition of Yahoo for $4.8 billion in July 2016 included language known as a material adverse change (MAC) clause. Unlike in most M&A deals, however, Yahoo disclosed after signing, that it had become aware of two cyber-attacks dating to 2013 and 2014, that compromised more than 1 billion of its customer accounts.

A MAC clause enables an acquiring company to abandon a deal without penalty if a materially adverse event happens between the agreement’s signing and completion. However, issues often arise over the definition of what constitutes a “material” event and assessing a financial impact, making such terms difficult to enforce, notes Antonio J. Macias, an assistant professor of finance at Baylor University’s Hankamer School of Business.

Read the full article at ThinkSet magazine.

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