Sandbagging And Anti-Sandbagging Provisions: A Mixed Bag

Introduction to Concepts of Sandbagging and Anti-Sandbagging

Typically, in M&A transactions, buyers undertake due diligence on targets prior to consummation of the transaction, to identify and assess key legal risks involved in the transaction. Due diligence is fundamental to M&A transactions as it enables buyers to ascertain and evaluate critical factors pertaining to targets, inter alia their assets, liabilities, financial position, business risks, and compliance levels. Basis findings of such due diligence, buyers, on the financial front, appropriately factor the identified risks while calculating the purchase consideration and, on the contractual front, require the seller to provide specific representations and warranties, backed by appropriate indemnities, to seek protection in case of a breach.