John At The Center

Since the risks are fewer, smaller changes are more easily adopted and can become viral. Exemptions to material adverse change clauses are a prominent example. The lore is that material adverse change clauses were first used in railroad indentures for British bonds back in the 19th century. The typical clause until the turn of this millennium was a bare statement to the effect that no material adverse effect had occurred. After 2000, however, exceptions otherwise known as carve-outs to M.A.C. clauses began to creep in. These carve-outs specified circumstances, like a change to the industry in which the target operated generally, that were excluded from being an M.A.C. The reasons that these clauses began to be included are still unknown but the IBP v. Tyson case no doubt hastened it. (I discussed this in a previous post.)

via How Innovations Spread in Deal-Making – DealBook Blog – NYTimes.com.