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August 3, 2021

03 August 2021

In Case of Emergency, Break Glass: Litigation and Drafting Guidance From Delaware Chancery Court Opinion on “Material Adverse Effect” Clauses

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The Delaware Chancery Court recently issued an opinion that confirms the difficulty of successfully invoking a “Material Adverse Effect” (“MAE”) clause in a merger agreement. In particular, the decision underscores the challenges of proving up an MAE — particularly when the target company is in a highly regulated industry — and provides useful guidance for drafting disproportionality exclusions in an MAE clause.

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