"Material adverse changes" are provisions associated with M&A transactions that guard against events that diminish the value or attractiveness of an acquisition target. These changes can range from terrorist acts to the trading volume of a target’s stock.

After issuing its sixth annual MAC Survey last fall, international law firm Nixon Peabody LLP has just released M&A Executive Insights 2008.

This follow-up survey of more than 100 senior Fortune 500 executives and private equity practitioners found that more than 90 percent of the latter group inserted additional MAC clauses due to the turmoil in the credit markets, while only 35 percent of corporate executives added clauses for the same reason.

Bottom-line: Private equity buyers, corralled after a 3-year M&A bull-run by now scarce and much pricier debt capital, are being hyper-cautious, while corporations, especially those with cash-rich treasuries, have taken strategic control. Certainly, this was borne out by the tech industry last year. Microsoft, IBM, Nokia and several other tech giants made their largest acquisitions yet—all in cash—putting strategic acquisitions atop the 2007 financing food chain.

Despite trickling deal flow and continuing market instability, however, more than 50 percent of the executives surveyed plan to "engage in M&A activity over the next 12 months." Also, 78 percent of the executives believe strategic deals will continue their dominance over financial deals this year.

And mega-buyouts, while in heavy pause, are far from dead. Last week, it was Arby's takeover of Wendy's. Yesterday, things went extra-planetary with Mars Inc.'s announced $23 billion purchase of Wm. Wrigley Jr. Co. Goldman Sachs and Berkshire Hathaway are also in on the deal; the combined company, with a 14 percent share, will becomes the world's largest candy maker.

Jeff Heilman

4/29/08