The Stack: Private Capital and AI Infrastructure
In any acquisition agreement, the “material adverse effect” clause does a lot of quiet work. It helps determine when a buyer may be excused from closing if something sufficiently bad happens between signing and closing. In practice, MAE clauses are rarely successful as closing “outs,” but they still matter because they frame risk allocation, negotiating leverage and the parties’ expectations about what types of adverse developments remain with the buyer versus the seller.