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Acronym for Material Adverse Change.


Acronym for Material Adverse Effect.

Maintenance Covenants

Legalese for an agreement to maintain something. In Startups, this type of Covenant is typically found in an Investor Rights Agreement or Loan and Security Agreement and requires the company to maintain a certain state of affairs, for example, to maintain certain levels of insurance.

Major Investor

An Investor that invests or loans the company an amount of money that meets or exceeds a specified threshold (set forth in the Transaction Documents) that then entitles the Investor to special rights (such as Information Rights).

Management Carve-Out Plan

A type of plan sometimes adopted by the Board of Late Stage Startups to provide a bonus to members of management and Employees based on a predetermined percentage of the proceeds generated from the sale of the company. A Management Carve-Out Plan is often used as an incentive tool especially in circumstances where the Equity held by such management members has been significantly diluted over time or is underwater. However, this type of plan is very case-specific and can be a sensitive topic to raise with Investors (since they are being asked to supplement already granted Employee Equity with additional incentives).

Management Rights Letter

Letter that certain Investors (common especially for VCs) request in connection with a Financing pursuant to which they are entitled to receive Information Rights (and sometimes Observer Rights) that may be required for the fund associated with the Investor to be considered a VCOC.

Management Team

A group of Employees, who are typically at the executive level and are in charge of carrying out the day-to-day operations and implementing strategy the Board sets for company.

Mandatory Conversion

Generally refers to the conversion of Preferred Stock upon the occurrence of certain specified events (as set forth in the Charter), which most commonly are either an IPO subject to minimum price and/or proceeds requirements (often referred to as a “Qualified IPO”) or upon the vote by the holders of a specified threshold of Preferred Stock.

Market Standoff Agreement

Another name for a Lock-Up. In Startups, this type of provision is typically found in the Investor Rights Agreement, as well as for Common Stock holders in their Stock Purchase Agreements.

Massachusetts Security Corporation

Any foreign or domestic corporation organized or doing business in Massachusetts that is (i) engaged exclusively in buying, selling, dealing in or holding Securities on its own behalf and not as a broker and (ii) classified as a Security corporation by the Commission of Revenue. This type of entity receives beneficial Massachusetts tax treatment.

Material Adverse Change (MAC)

Just like it sounds, this phrase refers to a “Material Adverse Change” in something — generally either the business or the Debt or equity markets. Material Adverse Change is an extraordinarily high standard in Acquisition Agreements (as of the publication of this Book of Jargon no Delaware court had ever found a MAC to have occurred). This term is used in two general contexts: either (i) as a Condition Precedent (for instance, a Seller would not have to Close on an Acquisition if there had been a Material Adverse Change to the business); or (ii) as a qualifier to Representations and Warranties (for instance, the environmental Representation is limited to instances where violations of the Representation could (or would) lead to a Material Adverse Change). Also referred to as Material Adverse Effect.

Material Adverse Effect (MAE)

Another name for Material Adverse Effect.

Materiality Qualifier

Shorthand for a word or phrase in Representations and Warranties or in Covenants that limit their operation to material events, changes or facts. An example would be insertion of the word “material” in a Representation that a company has all licenses required for the operation of its businesses. MACs and MAEs all include a Materiality Qualifier.

Maturity Date

Generally, in the Startup context, the date on which a Convertible Promissory Note or other Debt outstanding must be repaid in full.


A process pursuant to a state corporate law by which a corporation or other business entity (e.g., an LLC or LP) is combined by operation of law with one or more other corporations or business entities. Typically, the statute contemplates that each entity either be merged into another entity, which is the legally surviving entity, or be the surviving entity into which one or more other entities are merged.

Merger Agreement

An agreement between two or more entities providing for a Merger of at least one of the parties with or into one or more of the other parties. More generically, another name for an Acquisition Agreement. To become effective, a Merger Agreement almost invariably requires approval by both the Board of Directors and the Stockholders of each of the companies participating in the Merger.

Middle Market

Refers to companies with between US$50 million and US$1 billion in revenue.

Milestone Closing

Closing in a Financing with multiple Closings that is contingent upon the achievement of a specified Milestone.


Contractually agreed targets on the way to reaching some final target, the fulfillment of which triggers specific (agreed upon) consequences. In Startups, subsequent Tranches of a Financing may be contingent upon the achievement of specified Milestones, which would be described in the Stock Purchase Agreement.

Minimum Viable Product

A product designed to allow the Startup team to collect a significant amount of validated learning about the product and its development while expending minimum cost and effort.

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