A bring-down certificate is a closing document in mergers and acquisitions where an authorized officer confirms that the seller’s representations and warranties remain accurate as of the closing date, qualified to the standard agreed in the purchase agreement. It is not a new promise – it is an evidentiary bridge connecting signing-date statements to closing-day reality.
At closing, the buyer needs proof the seller still stands behind its claims. Lenders need confirmation their funding conditions are met. The seller delivers the certificate to meet those conditions, get paid, and close the deal. Although short – typically two to four pages – the certificate often determines whether a buyer can walk away, whether lenders must fund, and what posture each side takes if the deal is later contested.
In US private deals, the bring-down certificate appears as a closing condition in the purchase agreement. The buyer will not close without it. The closing condition sets the bar: either all representations must remain true at closing or they must be true except for changes that do not cause a Material Adverse Effect.
The certificate language should mirror the purchase agreement precisely. If the contract applies an MAE standard, the certificate must use the same MAE standard. No creative interpretation is allowed.
Even in simultaneous sign-and-close deals, the certificate matters because the formal closing occurs after funds and papers change hands. In deals with interim periods for antitrust approvals or other conditions, the certificate becomes central – it bridges the months between signing and closing.
US practice differs from UK deals, where warranties often get repeated at completion without a standalone officer certificate. Many European acquisition financings rely more on contract language than on separate certification forms.
Most private US deals operate under Delaware or New York law. The bring-down certificate is an ancillary document to the acquisition agreement. It does not create independent legal claims beyond what the agreement already provides – unless new standalone statements are added by mistake.
Accordingly, keep the certificate purely confirmatory and tie it directly to defined terms in the agreement.
Delaware case law on MAE sets the backdrop. Courts impose a high bar for MAE claims, requiring durationally significant adverse changes to the target’s business. Akorn v. Fresenius and Channel Medsystems v. Boston Scientific remain the leading cases on when buyers can refuse to close based on alleged bring-down failures. These cases make precision on MAE cross-references crucial. The certificate provides evidence, but the agreement’s language controls.
A proper certificate should cover these elements clearly and concisely:
The certificate must track the purchase agreement’s bring-down condition exactly. Misalignment can create unintended higher standards and potential closing failures.
Most agreements distinguish fundamental representations – organization, capitalization, authority, and title to shares – from other representations. Closing typically requires fundamental reps to be accurate in all respects, while non-fundamental reps must be accurate except where inaccuracies would not result in an MAE. This split should appear in the certificate with explicit cross-references to defined fundamental representations.
Do not modify survival periods, exclusive remedy provisions, knowledge qualifiers, or escrow structures in the certificate. Do not add statements about forward-looking performance, pro forma information, or projections. Avoid creating any new obligations or standalone representations.
A materiality scrape disregards materiality qualifiers in representations for indemnification purposes and sometimes for closing conditions. Private US deals frequently apply the scrape only to indemnity, leaving the closing condition tied to an MAE standard. This preserves a workable closing standard while preventing double-discounting for indemnity.
If a scrape applies to closing, the certificate must confirm the scraped standard. The purchase agreement should contain the scrape language – the certificate then repeats the condition rather than attempting to recreate it.
Whether sellers can update disclosure schedules between signing and closing is negotiated. Some agreements allow updates for closing but limit the impact on indemnification. Others permit updates only for changes in law or permitted actions.
The certificate should confirm use of updated schedules only if the agreement allows them. If updates are allowed and give the buyer termination rights, the certificate serves as formal delivery that starts the clock for the buyer to terminate or waive.
Certificates usually contain a separate confirmation that the seller performed all covenants required at or before closing. The condition often reads “in all material respects” with specified carve-outs.
Avoid generalizations. Do not attempt to list each covenant unless the closing checklist requires explicit references. Where critical covenants exist – for example, interim operating restrictions or delivery of third-party consents – separate notices or certificates can eliminate ambiguity.
Representations and Warranties Insurance has shifted risk away from seller indemnities, but it does not displace bring-down certificates. Underwriters require evidence of robust buyer due diligence and often require no-claims declarations at signing and closing. The bring-down certificate remains separate from insurer declarations, but policies may condition coverage on repetition of target representations at closing.
When RWI is used, buyers sometimes accept MAE-based closing standards without indemnity scrapes, relying on policy coverage for post-closing recovery. The certificate remains important evidence of closing-condition satisfaction and policy-condition fulfillment.
Acquisition financing often includes SunGard-style provisions where funding conditions are limited to narrow specified representations by the borrower and absence of a target MAE. Lenders typically require officer certificates confirming the specified representations and absence of default. These financings are often arranged as syndicated loans or unitranche structures.
The borrower’s officer certificate to lenders is separate from the seller’s bring-down certificate to the buyer, but they connect. If the seller cannot deliver its bring-down to the MAE standard, lenders may assert that their MAE condition is not satisfied.
Financing also requires solvency certificates, typically signed by the borrower’s CFO. This is not a bring-down of seller reps, but it is delivered simultaneously and often cross-referenced in financing conditions. Disconnects between solvency certificates, lender bring-downs, and acquisition agreement conditions create funding risk. Therefore, align definitions of Material Adverse Effect, Knowledge, Permitted Liens, and closing dates across documents.
If the seller cannot deliver the bring-down certificate to the agreed standards, the closing condition fails. The buyer then must choose to waive, terminate, or extend. Lenders may refuse funding, which creates pressure to waive or reprice.
In the event of disputes, the certificate’s wording becomes evidence when assessing whether conditions failed. Buyers considering refusal must assess whether breaches meet MAE thresholds or meet any all-true thresholds that apply to fundamental reps. Delaware courts scrutinize whether issues are durationally significant and whether buyers complied with efforts covenants to close.
Misaligned or overbroad certificates do not shield buyers if underlying conditions are met. Conversely, carefully tailored certificates do not save buyers who cannot show failure under the contract standards. If certificates are delivered but knowingly false, buyers may seek rescission or damages based on fraud or willful breach, notwithstanding exclusive remedy provisions.
A practical sequence helps reduce errors and last-minute surprises. Core documents and typical order:
Boards should authorize officers to sign closing certificates in their approving resolutions. Secretary certificates should identify authorized officers and include specimen signatures. Limit bring-down certificates to officers with appropriate knowledge and authority.
Typical signers are CEOs or CFOs. Corporate formalities matter in cross-border transactions. Some jurisdictions require notarization or apostilles for closing documents. While bring-down certificates rarely need notarization under US law, check local requirements for non-US signers, particularly in cross-border M&A.
If disputes arise, buyers cite certificates as evidence that sellers affirmed truth at closing. Sellers argue the certificates merely restated the contract standard and that no MAE occurred. Courts examine contemporaneous documents and diligence records to determine whether the closing conditions failed.
Carefully drafted certificates aligned with agreements avoid debates over whether the parties intended different standards. Inaccurate or absolute certificates risk being read as separate misrepresentations, which can open the door to fraud claims.
For most deals, a tight two to four page certificate with targeted attachments is sufficient. Apply these practical tips:
One day before closing, run a 60-minute bring-down drill. First, legal reads the bring-down condition out loud and re-checks every defined term against the certificate. Second, finance validates that payoff letters and lien releases align with the certificate timing. Third, operations confirms no new exceptions emerged since the last schedule update. This short, cross-functional review often catches misaligned definitions or last-minute facts that could otherwise delay funding.
The bring-down certificate is a short document with outsized impact. It operationalizes closing conditions on representation accuracy and covenant performance. Done correctly, it clears paths to funding and reduces litigation risk. Done carelessly, it elevates standards, creates closing failures, or becomes misrepresentation evidence. Treat it as a gating instrument, not a formality. It bridges the gap between signing optimism and closing reality. Remember: the certificate does not make representations true – it confirms they remain true. That difference can make or break billion-dollar deals.
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