Purchase Agreement: Bring Down Closing Condition

by Practical Law Corporate & Securities

A Standard Clause that provides a bring down condition for the closing of a private M&A transaction, including a stock purchase, asset purchase, or merger. The bring down is a critical closing condition that requires the seller's or target company's representations and warranties to be accurate again on the closing date, giving the buyer the right to terminate the deal if they are not. This Standard Clause presents two common variations for bringing down general representations and warranties, one using a materiality standard and the other based on a Material Adverse Effect (MAE) standard. It also addresses the bring down of fundamental representations, which typically must be true in all respects. The drafting notes discuss key negotiating points, such as the timing of the bring down, materiality scrapes, and important carve-outs. This Standard Clause also explores current market trends for these provisions, referencing data from the ABA Business Law Section M&A Committee's Private Target Mergers & Acquisitions Deal Point Study.