A transaction is never completed until the final document is signed. However, a number of issues need to be 'signed off' in both a buyer's and seller's mind before you actually sign the final legal documents.
Emotions
This will usually be the largest transaction anybody does and often
individuals have been longer with their businesses than in their
current homes. I see deals fail because emotionally timing was not
right, there is no real appetite to sell or the children working in
the business become more important than the proceeds. Make sure
that you understand these and they are 'signed off' well in
advance of completion.
Commercial
Many clients sign heads of agreement and think the deal is done,
but commercial issues will constantly come up. The Buyer will look
to use these to reduce the price or improve the deal and the Seller
needs to ensure that they are ready to repel any unreasonable
'changes'. Something will come up at completion for sure.
You should understand what this could be, how you would deal with
it or even what your 'walk away' position is. A strong
corporate finance adviser is vital – keeping everyone at
the table at the same time and ensuring you only complete on a
deal you are happy with.
Legal issues
The lawyer's job is to ensure that the legal documents reflect
the deal that you have done and protect you and the transaction
throughout an agreed future period. The documents are often lengthy
and involved and it is vital that you have considered and
understood them and have an experienced corporate transactional
lawyer to guide you through them. Consider whether your usual
family lawyer truly has the experience to protect you in this
process. It is useful to have a full pre-completion meeting
to go through and understand all the documents and prepare yourself
for the contentious points.
At the end, the completion meeting will be long, detailed and often
frustrating but, if you are well prepared and have good advice, it
will be successful. Hopefully then you will be ready for that glass
of champagne!
This document is provided for information purposes only and
does not constitute legal advice. Professional legal advice should
be obtained before taking or refraining from taking any action as a
result of the contents of this document.
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