With credit tightening, some dealmakers are looking for ways to walk away from deals that suddenly look shaky. One legal weapon that attorneys for purchasers and financial backers are brandishing is the "material adverse effects" contract clause, routine provisions that permit termination of a transaction where business conditions have deteriorated for a target company. Litigation over a $26 billion buyout of Sallie Mae is one of the few cases in which this murky area of the law has been analyzed.
Sallie Mae Litigation Raises Issue of Deal 'Adverse Effect'
New York Law Journal
November 14, 2007