There is a dearth of case law on material adverse change in SA
Nothing has been more gripping for merger & acquisition attorneys then when celebrity entrepreneur Elon Musk agreed to buy Twitter for $44bn in April. The drama that has unfolded has been more exciting than any Kardashian on-off relationship.
Musk’s argument centred on the number of spam accounts or bots on Twitter’s platform, which he claims is underplayed by the company, and was expanded to include revelations about information security at the company from a whistle-blower. First, the definition of what constituted a material adverse change in the agreement omitted any reference to Twitter's “prospects”. It is common for material adverse change definitions to include references to the target’s “prospects”. However, targets generally will be reluctant to agree to include prospects, because its inclusion reduces deal certainty.
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