The Merger Agreement That Ate Itself

Overview

A close read of a deal where the material-adverse-change clause was drafted so tightly that neither party could credibly walk, and both tried anyway. The episode covers the negotiation history, why the reverse termination fee was set where it was, and how Delaware has actually ruled on this kind of language. It ends on a broader point about how deal protection has drifted since the last cycle.

Key takeaways

• The MAC carve-outs did more work than the MAC itself — the exclusions defined the whole negotiation.

• A reverse termination fee priced below the cost of litigating is an invitation to litigate.

• Delaware keeps signalling that buyers lose MAC cases; the practical remedy has become renegotiation, not exit.

• Deal protection language has quietly loosened for sponsors and tightened for strategics.

Companies & tickers

• Illustrative Holdings

Topics

• M&A
• Deal law
• Delaware
• Market structure