Bring-down and Material Adverse Effect Closing Conditions | Practical Law

Bring-down and Material Adverse Effect Closing Conditions | Practical Law

A discussion of the negotiation tactics between buyers and sellers over the bring-down of the seller's representations and warranties from the signing to the closing date.

Bring-down and Material Adverse Effect Closing Conditions

Practical Law Legal Update 4-522-4922 (Approx. 2 pages)

Bring-down and Material Adverse Effect Closing Conditions

by Practical Law Corporate & Securities
Published on 04 Dec 2014 • USA (National/Federal)
A discussion of the negotiation tactics between buyers and sellers over the bring-down of the seller's representations and warranties from the signing to the closing date.
In any M&A deal that contemplates a delay between signing and closing, the acquisition agreement places conditions on the parties' obligations to close. Some of these closing conditions, like stockholder approval, are uncontroversial and do not involve much debate over their drafting. Other conditions can be drafted in any number of ways and thus become the focus of significant negotiation. Two examples of those conditions are:
  • The bring-down of representations and warranties from the date of signing to the closing.
  • The No Material Adverse Effect closing condition.
Practical Law's long-form stock purchase agreements describe the negotiation dynamics surrounding these closing conditions. For excerpts from those agreements and a snapshot of current market practice taken from the What's Market private acquisitions database, see Article, Bring-down and Material Adverse Effect Closing Conditions.