Eva Davis Talks to Law360 About Factors Leading to M&A Deals Falling Apart

Winston & Strawn Partner Eva Davis spoke with Law360 about how various factors are leading some M&A deals to fall apart. 

Eva weighed in on how the material adverse change or effect provision, otherwise referred to as the “MAC clause,” can be an out for buyers in M&A agreements. Eva stated that “a material adverse effect must typically rise to the level of being something pretty bad that the buyer didn't know about when the deal was first struck, such as financial issues that greatly affect the target company’s value,” and the seller doesn't want to put the time and money into litigating with the buyer.

She also touched on how record inflation levels and the increased cost of goods and labor are affecting M&A deals. “When you’re operating your business, both the cost of goods and labor are more expensive,” she said. “In addition, the price of debt to finance a transaction is also more expensive. As a result, clients have been very focused on these cost-related issues resulting in buyers offering lower valuations than they historically have.”  

Read the full article here.