SIGN TODAY, EXIT TOMORROW: HOW MAC CLAUSES LEAVE INDIAN SELLERS STRANDED

The use of Material Adverse Change (MAC) clauses in India's mergers and acquisitions deals is paradoxical in nature as it is written to offer protection to the buyer against any post-signing deterioration in the target, while it is being increasingly used as a strategic exit mechanism by the buyers. This paper makes an analysis of how the fundamental mismatch between the MAC clauses' structure and India's unique regulatory, legal, and information framework leaves Indian sellers at a systemic disadvantage when it comes to negotiations involving such clauses. By analysing relevant case laws in Delaware as well as relevant Indian statutes and recent rulings in Indian courts, this paper identifies three specific areas where MAC clauses can create problems for sellers: extended regulatory lock-ins, information asymmetry after signing, and judicial uncertainties.