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Elisabeth LeBlanc can be reached at or 504.582.8858.

Today, the Paycheck Protection Program and Healthcare Enhancement Act (the Enhancement Act) was signed into law. The Enhancement Act increases amounts authorized and appropriated under the Coronavirus Aid, Relief, and Economic Security Act (Public Law 116–136) (the CARES Act).

The Enhancement Act provides an additional $310 billion for the Paycheck Protection Program (PPP) under section

An important negotiating point between buyers and sellers of a business is whether to include within the acquisition agreement a “Material Adverse Change” (MAC) or “Material Adverse Effect” (MAE) related closing condition. For simplicity’s sake, we will use the term MAC to refer to both MAC and MAE.

Use of MAC Clauses

MAC clauses permit the buyer to void the transaction if, prior to the closing date, a material adverse development occurs that affects (or is reasonably likely to affect) the balance sheet, the results of operations or the business of the target company. Even in transactions in which the buyer does not prevail in including a standalone MAC closing condition, the transaction agreement frequently includes an absence of changes (or “no MAC”) representation that is brought down to the closing, along with a general representation and warranty “bring-down” closing condition that may be qualified by a MAC standard.

Pandemics and the MAC Clause

The coronavirus (COVID-19) pandemic has caused many companies and industries to experience widespread and severe disruptions to their operations, with some businesses facing material risks to their longer-term prospects. Given these developments, this is an opportune time to review MAC clauses for transactions that have signed but not yet closed, and to give special consideration to the risks presented by pandemics in negotiating and drafting MAC clauses for deals to come. In particular, this pandemic shows in high relief the danger of the carve-outs that are often included in the definition of a MAC. There is no doubt that this pandemic has had, and is continuing to have, an unprecedented material adverse effect on many businesses that no one could have anticipated, and would normally meet all the necessary elements of a MAC under Delaware case law. However, the effect of the carve-outs used in many acquisition agreements is to leave the buyer bearing the brunt of the risks associated with the pandemic.

Continue Reading Navigating the Pandemonium Raised by the Pandemic: Risk Mitigation in M&A