{"id":560989,"date":"2012-06-27T03:09:59","date_gmt":"2012-06-27T07:09:59","guid":{"rendered":"https:\/\/vrbbd.wpengine.com\/vrbbmadison\/keys-successful-closing\/"},"modified":"2022-01-31T12:44:38","modified_gmt":"2022-01-31T17:44:38","slug":"keys-successful-closing","status":"publish","type":"post","link":"https:\/\/www.vrbusinessbrokers.com\/vrbbmadison\/keys-successful-closing\/","title":{"rendered":"Keys to a Successful Closing"},"content":{"rendered":"
\n

The closing is the formal transfer of a business. It usually also represents the successful culmination of many months of hard work, extensive negotiations, lots of give and take, and ultimately a satisfactory meeting of the minds.\u00a0 The document governing the closing is the Purchase and Sale Agreement.\u00a0 It generally covers the following:<\/p>\n

\u2022\u00a0A description of the transaction<\/strong><\/b> \u2013 Is it a stock or asset sale?<\/p>\n

\u2022\u00a0Terms of the agreement<\/strong><\/b> \u2013 This covers the price and terms and how it is to be paid.\u00a0 It should also include the status of any management that will remain with the business.<\/p>\n

\u2022\u00a0Representations and Warranties<\/strong><\/b> \u2013 These are usually negotiated after the Letter of Intent is agreed upon.\u00a0 Both buyer and seller want protection from any misrepresentations.\u00a0 The warranties provide assurances that everything is as represented.<\/p>\n

\u2022\u00a0 Conditions and Covenants<\/strong><\/b> \u2013 These include non-competes and agreements to do or not to do certain things.<\/p>\n

There are four key steps that must be undertaken before the sale of a business can close:<\/strong><\/b><\/p>\n

1.\u00a0The seller must show satisfactory evidence that he or she has the legal right to act on behalf of the selling company and the legal authority to sell the business.<\/p>\n

2.\u00a0The buyer\u2019s representatives must have completed the due diligence process, and claims and representations made by the seller must have been substantiated.<\/p>\n

3.\u00a0The necessary financing must have been secured, and the proper paperwork and appropriate liens must be in place so funds can be released.<\/p>\n

4.\u00a0All representations and warranties must be in place, with remedies made available to the buyer in case of seller\u2019s breech.<\/p>\n

There are two major elements of the closing that take place simultaneously:<\/strong><\/b><\/p>\n

\u2022\u00a0Corporate Closing:<\/strong><\/b> The actual transfer of the corporate stock or assets based on the provisions of the Purchase and Sale Agreement.\u00a0 Stockholder approvals are in, litigation and environmental issues satisfied, representations and warranties signed, leases transferred, employee and board member resignations, etc. completed, and necessary covenants and conditions performed.\u00a0 In other words, all of the paperwork outlined in the Purchase and Sale Agreement has been completed.<\/p>\n

\u2022\u00a0Financial Closing:<\/strong><\/b> The paperwork and legal documentation necessary to provide funding has been executed. Once all of the conditions of funding have been met, titles and assets are transferred to the purchaser, and the funds delivered to the seller.<\/p>\n

It is best if a pre-closing is held a week or so prior to the actual closing.\u00a0 Documents can be reviewed and agreed upon, loose ends tied up, and any open matters closed.\u00a0 By doing a pre-closing, the actual closing becomes a mere formality, rather than requiring more negotiation and discussion.<\/p>\n

The closing is not a time to cut costs \u2013 or corners.\u00a0 Since mistakes can be very expensive, both sides require expert advice.\u00a0 Hopefully, both sides are in complete agreement and any disagreements were resolved at the pre-closing meeting.\u00a0 A closing should be a time for celebration!<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

The closing is the formal transfer of a business. It usually also represents the successful culmination of many months of hard work, extensive negotiations, lots of give and take, and ultimately a satisfactory meeting of the minds.\u00a0 The document governing the closing is the Purchase and Sale Agreement.\u00a0 It generally covers the following: \u2022\u00a0A description […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[],"class_list":["post-560989","post","type-post","status-publish","format-standard","hentry","category-selling-a-business"],"blocksy_meta":[],"_links":{"self":[{"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbmadison\/wp-json\/wp\/v2\/posts\/560989","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbmadison\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbmadison\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbmadison\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbmadison\/wp-json\/wp\/v2\/comments?post=560989"}],"version-history":[{"count":0,"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbmadison\/wp-json\/wp\/v2\/posts\/560989\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbmadison\/wp-json\/wp\/v2\/media?parent=560989"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbmadison\/wp-json\/wp\/v2\/categories?post=560989"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbmadison\/wp-json\/wp\/v2\/tags?post=560989"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}