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.
21 May 2019 - Healy Jones, VP of Marketing
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