MAC Clause and Deal Closing Risk

Step 1: EBITDA Decline Since Signing

EBITDA Decline % = ($80.0m − $66.0m) / $80.0m = 17.5% (0.175)

This percentage decline is the standard proxy negotiators use to measure "materiality" in a deal — it translates a qualitative business setback (losing a customer) into a number both sides' counsel can argue about. On its own, though, a single EBITDA snapshot rarely settles a MAC dispute; it's the opening data point, not the conclusion.

Step 2: MAC Threshold Test

17.5% < 20% (0.20) → the decline does not cross the negotiated numeric threshold.

Even if the threshold had been crossed, that alone wouldn't guarantee a successful MAC claim. Delaware courts (the dominant forum for these disputes) have historically set an extremely high bar: the buyer must show the decline is both substantial and durationally significant — likely to persist over multiple years, not just one bad quarter. The only Delaware case where a MAC was successfully invoked, Akorn v. Fresenius (2018), involved a sustained, multi-quarter earnings collapse combined with serious regulatory and data-integrity violations at the target — a far more extreme fact pattern than a single lost customer.

Step 3: Carve-Out Check

Before even reaching the threshold question, buyer's counsel has to confirm the event isn't excluded by the MAC definition's carve-outs. A single customer loss is company-specific, not an industry-wide or macroeconomic shock, so it would not automatically fall into the standard exclusions — but the buyer still has to prove it's the customer loss (not, say, a broader sector slowdown) actually driving the EBITDA decline.

MAC carve-outs exist because sellers negotiate hard, pre-signing, to shift general market risk back onto the buyer: once the agreement is signed, the buyer is expected to bear ordinary business and macro risk, and only company-specific, severe deterioration should let it walk away.

Final Results

• EBITDA Decline Since Signing: 17.5%
• Negotiated MAC Materiality Threshold: 20%
• MAC Triggered (numeric test): No
• Credible Legal Basis to Walk Away: Unlikely — decline neither crosses the threshold nor demonstrates durational significance

This numeric test is only the starting point for how deal teams actually behave: because MAC clauses are so hard to invoke successfully, buyers rarely try to terminate on MAC grounds alone — instead, a bad event like this one typically becomes a renegotiation lever, used to push for a lower purchase price or additional seller protections rather than to walk away outright.

Would you like to explore how MAC clause carve-outs are typically negotiated pre-signing, or how "SunGard" provisions limit a buyer's ability to walk away over financing failures?