Ep #35: The Big MAC: Protect Your Restaurant Deal from Material Adverse Changes

Restaurant Deal Making Exposed #35

What happens when a restaurant deal is nearly complete and a sudden change threatens to derail it? Material adverse changes (MAC) can turn a smooth transaction into a complicated situation, and they often appear when you least expect them. From equipment failures to unexpected employee raises, the time between signing a contract and closing escrow is full of risks that can dramatically alter a business’s value.

In this episode, we break down material adverse changes—those clauses in nearly every restaurant purchase agreement that protect buyers and sellers when unforeseen events impact the fundamental value of a business. We share real examples from our own deals, from pandemic cancellations to undisclosed business loans, and explain how even routine changes like a seller closing for vacation can create major complications if not handled properly.

You’ll learn how to navigate MAC situations, including why thorough seller disclosures are your best defense, how to handle disagreements when buyer and seller perspectives clash, and when bringing in a third-party professional can help resolve disputes. By understanding these risks and strategies, you’ll be better prepared to protect your restaurant transactions and keep deals on track, even when unexpected changes arise.

What You’ll Learn from this Episode:

• Why material adverse change clauses exist in nearly all restaurant purchase agreements and how they protect both parties.

• The difference between asset sales and going concerns when evaluating business continuity during escrow.

• How employee raises or business hour changes during escrow can trigger MAC provisions.

• Why updating seller disclosures throughout the transaction is critical as new issues arise.

• How dual agency complicates MAC situations and when to bring in third-party professionals.

• What "residual goodwill" means in asset sales and why keeping doors open matters even without the business name.

Listen to Podcast