The Closing Table
THE SUCCESSFUL CLOSING
Now that all of the contingencies have been satisfied and removed from the Contract, it’s time to draft the final closing documents. These documents may be prepared by the Seller’s attorney, Buyer’s attorney or a third party attorney employed by the business broker. The basic documents associated with the transfer of a small business generally include:
- The Bill of Sale
- The Purchase/Sales Agreement
- The Promissory Note
- The Security Agreements
- The UCC Financing Statements
- The Bulk Seals Affidavits
- The Board of Director’s (authorization to sell) Resolution
- Real Estate Documentation (if appropriate)
- Lease Agreements
- Other Side Bar Agreements
- Closing Statements
Based on the agreement between the parties, as stated in the Contract, the above closing documents are prepared and furnished to all parties (and their attorneys) several days prior to closing. Any other minor changes are made and agreed to prior to closing. There should be no last minute or unexpected changes at closing. If the parties have followed the correct sequence of events throughout the purchase/sale process, the actual closing will almost be “anti-climatic”. The principal parties will meet at a specified time and place on the day of closing to:
- Execute (sign) the pre-approved closing documents.
- Transfer proceeds of the sale to the Seller.
- Transfer ownership of the Business to the Buyer.
A smooth and successful closing is certainly a credit to the principal parties, as well as any intermediaries involved in the sale.
Closing the Deal: A Simplified Checklist
Prorate rent, utilities, inventory to time of closing.
Review Seller’s Business Documents: i.e. tax releases, corporate filings
Promissory Note Documentation: applicable if Seller will carry financing
Security Agreement: applicable if buyer is obtaining outside financing
UCC Financing Statement: applicable if buyer is obtaining outside financing
Lease Assumption or Renegotiation
Vehicle Transfer Documents: applicable if the purchase includes vehicles
Bill of Sale: will transfer the ownership of the other tangible business assets not specifically transferred on their own.
Patents, Trademarks, & Copyrights (if applicable)
Franchise Documents (if applicable)
Closing or Settlement Sheet: lists all financial aspects of transaction
Non-Compete Covenant (if applicable)
Consultation Agreement: if seller has agreed to assist the new owner for a period of time
Asset Acquisition Statement: IRS Form 8594