Company Sales: The Final Steps Before Closing

Company Sales: The Final Steps Before Closing

Even after a successful due diligence, several critical steps remain before ownership formally transfers from seller to buyer. This phase requires careful negotiation, precise documentation, and close attention to detail.

Final negotiations

Once due diligence is complete, the final negotiations begin. This is where all remaining details and conditions of the transaction are agreed. Common areas of negotiation include:

• Purchase price and adjustments – Following due diligence, buyers may argue for a lower purchase price or altered terms based on findings. It then becomes a matter of negotiation whether to adjust the price or structure compared to earlier agreements.
• Warranties – In the share purchase agreement, sellers typically provide a broad set of customary warranties (e.g., ownership of the shares, accuracy of financial reporting). Buyers may request additional warranties if due diligence has revealed risks. These commitments mean the seller agrees to compensate the buyer for certain potential losses.
• Pre-closing obligations – In some cases, the seller must complete specific actions before closing, such as finalizing projects, meeting regulatory requirements, or settling debts. These obligations must be clearly defined, and the seller will be expected to show proof of completion before closing.

Signing the final agreements

When negotiations are complete, the parties sign the final agreements. This step legally binds both seller and buyer.

The share purchase agreement governs the transfer of shares. If the seller retains an ownership stake, a shareholders’ agreement is also signed. Other documents may include revised employment contracts or other ancillary agreements.

Closing – transfer of ownership

Closing marks the formal transfer of ownership from seller to buyer. In some cases, signing and closing occur simultaneously; in others, closing may be deferred until certain obligations are fulfilled.

To ensure a smooth transfer, it is essential that all documents and processes are in place.

Tips for a successful closing:

• Communicate openly – Maintain regular dialogue with the buyer to avoid misunderstandings and address issues promptly.
• Prepare thoroughly – Have all documents and commitments finalized before closing.
• Engage advisors – Work with legal and financial advisors to safeguard your interests and ensure the deal is handled correctly.
• Focus on details – Even small oversights, from asset transfers to formalities, can cause major issues if not addressed properly.

At FLB Partners, we guide entrepreneurs and business owners through every stage of the sales process — from preparation to closing. Contact us today to learn how we can help you achieve a successful transaction.