Whether you are a business buyer or a business seller, the goal of your business transaction journey is to arrive happily at a closing. If you are new to the business transaction journey, you may be wondering what “closing” means for you. Here’s an explanation.
When talking about the buying or selling of a business, the closing is the end point of the transaction. This occurs when all parties included have signed all necessary documents, when the money has changed hands, and the keys to the business are given to the new owner.
In many circumstances, this will all occur at one meeting, sometimes referred to as the “closing table”. All parties will arrive ready to sign and exchange the necessary funds and keys. The business brokers and business transaction attorneys will be present, and typically the funds for the sale will be in the hands of an escrow agent who will release them once the appropriate papers are signed.
In other transactions, the escrow agent acts as a kind of intermediary for the closing. Each party will receive and sign the necessary documents and then send them to the escrow agent. Once the agent has received everything needed for the closing from both parties, the funds in escrow will be released to the seller and the deal will then be officially “closed”.
The closing type will depend on the preference of the parties involved. Ask your business broker about which type of closing you will likely see at the end of your specific transaction.
Another aspect of the closing process usually involves a walk-through of the business and an inventory count. This is important because if equipment or inventory has changed, the selling price of the business may need to be adjusted.
If you are business buyer or seller with questions about the closing process, please leave us a comment or question here and we will happily get those questions answered.
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