Understanding the MAC Clause
Recently I got an email from a venture guy who’s been in the business for a long time and he asked me if we have a MAC clause—a material adverse change clause– that’s what MAC stands for. Because he was talking to one of his portfolio companies, they wanted to raise some debt, but they didn’t want to be bound by a MAC clause, which is in every bank financing.
We do not have a MAC clause so if there’s a change we don’t have the ability to retroactively go back and ask people to pay down the debt that’s outstanding. Whereas a bank does, and that’s a big deal for a lot of companies.
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