Closing the sale of your business

By the time a deal reaches closing, most of the hard negotiating is supposed to be finished — but closing day itself is not a formality, and deals do still fall apart or get delayed at this stage. A purchase agreement is a set of promises about what will be true and what will happen on a specific date, and closing is where every one of those promises actually gets tested. Understanding what genuinely happens between a signed agreement and a completed sale is what keeps a seller from being blindsided in the final stretch.

Conditions precedent have to be satisfied, not assumed

A purchase agreement typically lists conditions that must be met before either side is obligated to close — financing being confirmed, key contracts or the lease being formally assigned, regulatory or landlord consents being obtained, and confirmation that nothing material has changed in the business since the agreement was signed. Any one of these can push back the closing date if it is not resolved in time, and a seller who assumes conditions will simply sort themselves out is often the one caught off guard when one has not. Track each condition against a written checklist with a named owner and a realistic date, rather than trusting that everyone involved is independently keeping pace with the calendar.

Disclosure schedules get finalized right up to the date

The disclosure schedules attached to the purchase agreement — lists of contracts, employees, litigation, and any exceptions to the representations and warranties the seller has made — are often updated in the days immediately before closing to reflect anything that has changed since signing. This is not a formality to rush through; an inaccurate or outdated disclosure schedule can create real exposure for a seller after closing, so treat this update with the same care as the original schedules.

A material adverse change clause can still derail things late

Many purchase agreements let a buyer walk away, or renegotiate, if something materially damaging happens to the business between signing and closing — a major customer lost, a key employee quitting, an unexpected lawsuit. This clause exists precisely for the gap between agreeing to a deal and actually closing it, and a seller should understand exactly what would trigger it well before that gap opens, because the standard for what counts as "material" is often more contested than either side expects going in.

Funds actually move in a defined sequence

Closing day involves a coordinated flow of money — the buyer’s funds arriving, existing debts and liens against the business being paid off and discharged, any escrow or holdback amount set aside, broker fees settled, and the remaining balance released to the seller — usually choreographed by the lawyers on both sides through a written funds-flow statement. This can take longer on the actual day than either party expects, particularly when multiple lenders, an escrow agent, and payoffs to existing creditors all need to be coordinated in the right order.

Representations and warranties do not end when the ink dries

The factual promises a seller made about the business generally survive closing for a negotiated period afterward, during which the buyer can bring a claim if something turns out to have been inaccurate. Understanding exactly how long that survival period runs, what the cap on your liability is, and how a holdback or escrow interacts with any claim is important precisely because your obligations as a seller do not simply end the moment the sale closes — some of them follow you for months or years afterward.

What still commonly goes wrong on closing day

Even well-prepared deals hit friction at closing: a landlord’s consent to assign the lease arrives later than promised, a lender’s funding is delayed by a day, a licence transfer that seemed routine turns out to need more processing time than expected, or a last-minute disclosure update triggers a fresh round of questions from the buyer’s lawyer. Building slack into the closing timeline, and having your lawyer track every outstanding condition against a checklist rather than trusting memory, is what prevents a minor delay from becoming a serious problem. Scheduling the actual closing for a day with room to spare before any deadline that matters to you — a lease renewal, a personal commitment — gives everyone room to absorb a small slip without it becoming a crisis.

• Confirm every condition precedent is actually satisfied, not merely expected to be
• Update disclosure schedules right up to the closing date
• Understand what would trigger a material adverse change clause before signing
• Get the funds-flow statement confirmed by your lawyer ahead of closing day
• Know your survival period and liability cap on representations and warranties