An anti-sandbagging clause stops the buyer from bringing a warranty claim for something they already knew about before completion. If the buyer’s deal team saw the problem in the data room and signed anyway, this clause is what stops them cashing in on it later.
Technically, it is a provision barring a warranty claim where the buyer had actual or constructive knowledge of the relevant matter before completion. It can be drafted narrow, actual knowledge of named deal team members only, or wide, constructive knowledge based on anything made available in the data room.
The buyer wants no anti-sandbagging protection at all, or a version so narrow it rarely bites, so a signed warranty stays enforceable no matter what their advisers already knew. The seller wants the opposite: broad cover, because it rewards buyers for actually reading the diligence material rather than skim-reading it and claiming later.
The knowledge standard is where the real fight happens. Actual knowledge of two named individuals protects almost nothing, since a diligence team of a dozen advisers can always find someone who did not personally read a given document. Constructive knowledge based on data room access protects much more.
What you as a seller should push back on: a knowledge standard limited to a handful of named individuals, any carve-out that excludes data room material from constructive knowledge, and silence on the point altogether, which in most Australian deals defaults toward the buyer.