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Show Me the Money: Financial Ability Representations

January 31, 2023

The seller usually wants assurances that a buyer will be able to fund an acquisition at the closing, particularly if the closing is subject to a lengthy interim period between signing and closing. If a buyer is using third-party financing to fund all or a portion of the purchase price, the seller should negotiate for a representation from the buyer relating to the buyer’s financial ability to consummate the acquisition. In connection with making the representation, a buyer typically provides the seller with documents that help the seller to understand the financing terms and conditions. Explore the nuances of drafting and negotiating a buyer’s financial ability representation.

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