The day you have been waiting for is here – it is the closing day of your acquisition! Closing day is a fantastic landmark for your takeover to have reached. And after what might have seemed like forever and involved some tough negotiations, it is nearly time to pop a celebratory cork.
But hang fire on opening the really expensive stuff just yet…
This blog will explain what you can expect from closing day, and why the hard work is not necessarily over…
What Happens On Closing Day?
Closing day takes you one step further towards realising your new business dreams. It is a momentous occasion which signifies ownership of the company passing from the seller to you, based on the agreed terms of the sale.
From last checks to signing on the dotted line and preparing the money for release, here is what you can expect from your closing day…
Buying a business is a complex process – as you probably already know! The paperwork can seem overwhelming, but educating yourself and knowing exactly what you need can help to reduce some of the stress you might be feeling.
The key documents you will need for closing day are:
- Sales and Purchase Agreement
- Transitional Services Agreement
- Stock Transfer Forms.
With these documents at the ready, you will meet with the seller and your independent advisors either in person or remotely, ready to dip your nib in the ink, ready to sign.
Time To Sign
Having already checked everything over with a fine-tooth comb, performed due diligence, completed negotiations and not to mention all the other nuances, it’s time to sign.
Before you do, though, take time to ensure everything is as you want it.
After all, you are about to part with a significant amount of money. If you are at all uncertain, it’s not too late to back out. This acquisition will affect your future as well as the future of any existing business, and you need to be certain the deal you are about to make is beneficial.
Once totally satisfied things are as they should be, both you and the seller can put your signatures to paper to secure the takeover.
Transferring Of Funds
At this point, the finance raised is in escrow, ready to be released to be transferred to the seller.
The finance may not be released immediately as there may be certain requirements pertaining to its release, such as the handover of control of the business bank accounts. Typically, you can expect these 24-48 hours after the business has officially become yours.
With signed documents in place and the funds are ready to be transferred, the business is officially yours.
What Happens Next?
Now begins the transitional period of your acquisition.
As part of your negotiations, you will already have the parameters of the transition in place as set out in the Transitional Services period contract, that will have been referred to in the sales and purchase agreement. It typically lasts for six to eighteen months, during which the seller will remain involved in your business to ensure a full and proper handover.
You may also have stipulated an ‘earn-out’ contingency payment on top of the purchase price of the business, in which case, if the seller does not meet set performance markers during the transitional period, it may reduce how much you end up paying for the acquisition.
Now Is NOT The Time To Sit Back And Relax
Once the ink is dry on your acquisition, it can be tempting to assume you can take things easy.
Remember the ‘hard work’ mentioned at the beginning of this blog? This is when it starts.
You have a brand new business to take the reins of and steer in a direction of your choosing. Be that along the same path, around a few obstacles or hopefully to higher levels of success.
Shareholders, employees, clients, suppliers and competitors, to name a few, will all be knocking at your door. Eager to meet the new visionary, and find out what you have in store for them and the business you have newly gained.
You are about to be busier than ever!
This onboarding period is critical if you want your acquisition to be a success, so be sure that you have a strategy in place (ideally the first 100 day plan to provide foundation for your longer term plans) and the right people around you to support you as you take this journey.
Push Your Acquisition Over The Finish Line In First Place
With over twenty years of personal and professional acquisition experience, Clive knows exactly what is needed for your closing day to be a great experience for everyone involved. He will also be able to help prepare you for what happens next.
To reach out to Clive and start a conversation about your acquisition, no matter what stage you are at, click here…