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When a buyer in a private acquisition transaction knows (whether at signing or before closing) that a representation or warranty given by the seller is not true yet closes the transaction anyway and then seeks damages for breach of representation or warranty, the buyer is said to have "sandbagged" the seller. On its face, such a claim might seem unfair to a seller, and even the name "sandbagging" suggests an inherent unfairness to this practice. However, there are many practical considerations with respect to risk allocation and expediting contract negotiations that might justify allowing the buyer to sandbag the seller post-closing. While some acquisition agreements attempt to explicitly preserve the opportunity of the buyer to do so by including a pro-sandbagging clause or explicitly deny such opportunity using an anti-sandbagging clause, many acquisition agreements are silent on the topic. Check out the market trends with respect to sandbagging provisions in M&A agreements publicly filed in 2023 and access representative examples in Market Standards.
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