Sales Process Step 10: Closing The Transaction
This is the point after which you can be assured that you have realized your goals; the transfer of funds and the sale process is completed. Closing the transaction will likely represent a major milestone in your life. Through escrow, the preparation of the closing documents are coordinated by us to ensure that they are prepared and tailored to meet the individual needs of you as the seller.
The closing is the meeting which takes place after the parties have signed the Purchase and Sale Agreement where the seller will effectively transfer ownership of the business to the buyer and the buyer will pay the seller the agreed upon sales price or down payment. It should be noted that rarely is the closing a cut and dry and process. Oftentimes, certain adjustments need to be made on the day of the closing. For instance, if the exact sales price is based on the value of the inventory on the day of the closing, an adjustment may be required at the last moment on the day of closing.
Who Attends the Closing
Certainly the buyer and seller will attend the closing but, often, others need to attend as well. For example, if you're married, since California is a community property state, your spouse will be required to sign the transfer documents. Likewise, if there are guarantors or other necessary parties to the transaction they may need to be present as well (unless their signatures were secured in advance of the closing or you are authorized to execute documents on their behalf pursuant to a power of attorney). Obviously, the Purchase and Sale Agreement, related attachments thereto and the supporting transfer documents will indicate who is required to sign either prior to, or at the closing. If represented by an attorney in the transaction, your lawyer's presence at the closing can be reassuring and streamline the process.
When to Hold the Closing
We typically recommend scheduling the closing toward the last day of the month, on a weekday and first thing in the morning (when governmental offices, banks, title insurance companies are available and with enough time to work out unexpected issues). Scheduling the closing on or near the last day of the month makes prorating expenses easier.
Closing Checklist
We strongly recommend that the buyer and seller agree upon a customized closing checklist to coordinate and streamline the closing. While the items on a checklist will vary for each business sale, our Seller's Kit provides a sample master checklist for an asset sale and an entity sale for your review. We will prepare the checklist for your use in connection with the sale of your business.
