Buying a business – off to the close

March 30, 2010

When you are buying / selling a business, when are you ready to close?

Sometimes the answer is NEVER!  In some cases, everything seems to be moving just as it should and then the littlest but most significant piece is undone and can not be gotten over.  Perhaps it is the transfer of the phone number.  The buyer obviously wants, and usually needs, it and the seller can’t part with it because Mom calls on that line. The deal goes sour and that is that.  A broker can help the parties through these situations but the buyers and sellers need to WANT to do the deal.

On the other hand, when the parties want to do the deal the biggest obstacles can just melt away.  Take the example of the demand of the seller that a certain employee maintain a position.  In the seller’s mind, this will help to secure his financing of the transaction and perhaps it will.  The buyer agrees and the steps to close continue.  Then, the employee decides they don’t really want to work for the buyer.  Because the Seller wanted to close, the requirement was dropped and the parties moved forward.

You are ready to go to close when all contingencies have been removed and the buyer and seller say “Lets Go!”  Then and only then should the closing documents for the sale of the business be drafted and expense that should not go to waste.  A broker may have the parties sign off that all requirements have been met and they are willing to go to close AND assume the costs of closing whether they arrive at the table or not.

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