Material Adverse Change as Event of Default in Venture Debt

Video: What’s a Venture Debt Material Adverse Change Clause?

Material adverse change clauses, or MAC, is the one term you do not want to have on your term sheet.

That means the lender can cite a change in the business, change in the business environment, whatever they want because it’s kind of an ambiguous term, and they can declare a default.

Once you’re in default with the lender, that means you got to play by their rules, and they can always force you to a liquidator or pay down the loan. You have to listen to what they say, and do whatever they ask.

Stay out of default, and don’t do a material adverse change in your venture debt term sheet