Law Commons^™

Covid-19 As A Force Majeure In Corporate Transactions, Matthew Jennejohn, Julian Nyarko, Eric L. Talley

Faculty Scholarship

This paper surveys the use of pandemic-related provisions in Material Adverse Effects ("MAE") provisions in a large data set of publicly disclosed M&A transactions spanning the years 2003-2020. We document a trend towards greater use of such provisions, taking off particularly after the H1N1 crisis in 2009, and spiking again in late 2019 and early 2020. These terms are invariably located in the exclusions/carve-outs to the MAE, and they are overwhelmingly accompanied by "disproportionate effects" language that tends to dampen the effect of the carve out. There is little discernible statistical relationship between the inclusion of a pandemic-related carve-out and …