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The conventional wisdom is that MAE/MACs in merger agreements provide an opportunity for buyers to renegotiate merger agreements in the event of intervening adverse events. However, the experience following the COVID-19 outbreak suggests that the conventional wisdom is incorrect or at least overstated. In fact, MAE/MACs shift the risk of exogenous adverse events (like COVID-19) to buyers while leaving only the risks of adverse endogenous and semi-endogenous events with the seller. The consequence of this risk-shifting is to strictly limit the circumstances under which a buyer can credibly lean on a MAE/MAC to threaten to terminate a merger agreement and initiate a renegotiation. Parties to merger agreements appear to have internalized that lesson, as demonstrated by the relative paucity of renegotiations in the immediate aftermath of the COVID-19 outbreak.


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7 Sep 2022
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  • Subject
    • Business Organizations Law

    • Law and Society

  • Journal title
    • University of Richmond Law Review

  • Volume
    • 55

  • Issue
    • Winter

  • Pagination
    • 565-613

  • Date submitted

    7 September 2022