What is the MAC Clause all about? Essentially, it is the clause that lets a buyer back out of a deal if there has been a "materially adverse change" in the sellers business between the execution of the APA / SPA and closing.

In most cases, the sellers think to themselves "There is no chance that my business will change for the worse in the next 15-30-60 days." The business has always performed, the seller has a clear sense of the market, and things are on a solid course.

Further, in many small deals the closing and the execution of the APA coincide, negating the effecting of any interim period. Yes, there are still reps and warranties. But the deal is still done.

That all said, we have seen a number of larger transactions stalled recently- most due to debt financing problems - where the buyer looked to back out. The clause that they have been leaning on is the MAC. The buyer has claimed there has been a an adverse change in the underlying business, hence calling for either a cancellation of the deal or a renegotiation of price / terms. Examples:

• Sallie Mae deal
• WPP Group's Buy-out of Tempus Group
• Genesco

Bottom Line - small deals are less likely to have a buyer throw up the "MAC" flag, but do your homework and consult counsel as you getting ready to sign your APA.