In the fields of mergers and acquisitions and corporate finance, a material adverse change (abbreviated MAC), material adverse event (MAE), or material adverse effect (also MAE) is a change in circumstances that significantly reduces the value of a company.
A contract to acquire, invest in, or lend money to a company often contains a term that allows the acquirer, investor, or lender to cancel the transaction if a material adverse change occurs.
For example, time may be required to obtain approval of the transaction by government agencies, shareholders, labor unions, lenders, or others.
Until the transaction is completed, the companies involved go on about their business and are subject to risks.
One notable example of this was the planned acquisition of SLM Corporation (formerly known as Sallie Mae) by a group including Bank of America and JPMorgan Chase.