Business Sale Closing Checklist

Sample checklist – business sale closing

BUSINESS SALE CLOSING CHECKIST

Once contingencies have been met, closing may take place. While closing may take place at an escrow company (with the escrow company generally to receive any future payments from the buyer for recordkeeping purposes with each payment net of a collection fee to be transferred to the seller), oftentimes closing is held at a place convenient to the parties (such as the business location or a law office). The steps that need completing during closing will vary depending upon whether the buyer is making full payment at closing or not among many other possible factors underlying the sale. The following is intended as a guideline checklist for steps to be taken at closing:

1. Transfer of funds from the buyer to seller – part or all of the purchase price.

2. Determination of prorations (such as under a premise lease, equipment lease, utilities, and/or other services, etc.) with any appropriate payments made (such as, by the buyer to the seller who has paid an entire month of rent with closing in mid- month).

3. Assignment agreements (such as for the lease premises, equipment leases, franchise agreement and/or other agreements) need to be executed before closing. arrangements need to be made to transfer utility services to the buyer’s name.

4. Execution of any agreements or documents not previously executed (such as a Bill of Sale) for the benefit of the buyer.

5. Transfer of physical possession of the assets and premises, if appropriate. The buyer should receive the keys to the premises and any other appropriate items (such as vehicles purchased).

6. Forwarding any announcement to patients, clients or customers regarding the sale.

7. Proof of insurance (generally, the insurance provisions would contain a subrogation waiver provision and insurers need to be notified) as required by the sales agreement, a lease or otherwise.

8. The author assumes certain agreements have been executed before closing such as the actual asset purchase agreement, promissory note, security agreement, UCC-1, lease assignment and other documents. If all other agreements and related documents have not been executed, they would need to be completed at closing. The attorneys should be careful and determine that all attachments are made (including such items as a map outlining a non-competition restrictive area and equipment and other asset lists). The seller must keep in mind any buyer personal guarantee agreement or indemnification agreement must be signed by husband and wife pursuant to 25 ARS 214C2.

9. Security documents should be processed, such as filing the UCC-1 (with all attachments including the collateral listing) with the Secretary of State and recording the document if it is a fixture filing.

10. The parties should calendar purchase price payment dates as well as assumed loan, lease or any other type of payment dates.

11. Each party and all attorneys should be sure to have executed copies of all documents along with all attachments. The clients need to be informed to store the documents safely, as they may need to be reviewed in the future, such as the buyer fails to make a payment and the seller needs to determine the method of notice and the extent of the grace period allowed. Generally, the buyer would retain the original sales agreement and the seller would retain the original promissory note and security documents. Duplicate originals may be signed, but executed copies are sufficient for recordkeeping and legal purposes.

Oftentimes, specific counts of inventories or other items are required just before closing with the actual payment to be made at closing, to be increased or decreased depending upon the actual value assigned as opposed to the estimated value set forth in the purchase contract.