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Materiality scrape

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Quick Answer

A materiality scrape reads materiality qualifiers out of the representations for the purpose of calculating losses, so that immaterial breaches still count once the basket is cleared.1,2

What it is

A single scrape applies to the damages calculation only; a double materiality scrape applies to both whether a breach occurred and how much it cost. Sellers resist the double form because it converts qualifiers negotiated into the reps into qualifiers that do no work at the moment they matter.1,2

Operational context

What good looks like

Why It Matters

A scrape can be worth more than several points of cap. Winning a materiality qualifier in the reps and then conceding a double scrape in the indemnity gives the qualifier back.1

Frequently Asked Questions

What is Materiality scrape in venture capital?

A single scrape applies to the damages calculation only; a double materiality scrape applies to both whether a breach occurred and how much it cost. Sellers resist the double form because it converts qualifiers negotiated into the reps into qualifiers that do no work at the moment they matter.

Why is Materiality scrape important for startups?

Understanding Materiality scrape is critical for founders navigating the fundraising process. It directly impacts deal terms, valuation, and the relationship between founders and investors.

Sources & References

  1. 1.T3-02 — K&L Gates2025 ABA Private Target M&A Deal Points StudyK&L Gates(A materiality scrape reads materiality qualifiers out of the representations for the purpose of calculating losses, so that immaterial breaches still count once the basket is cleared.)secondary · T3 · deal-documents · concept
  2. 2.T2-03 — ABA Business Law TodayAnnouncing the ABA's 2025 Private Target M&A Deal Points StudyABA Business Law Today(A materiality scrape reads materiality qualifiers out of the representations for the purpose of calculating losses, so that immaterial breaches still count once the basket is cleared.)primary · T2 · deal-documents · concept

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