8. Concluding the Transaction
In the previous article, we presented the negotiation process of the final terms of the transaction. After the negotiations are over, it is time to sign the sale/purchase contract. Work together with your broker, lawyer, or accountant to make sure everything is ready for the business transfer.
The contract will be signed at the escrow office, following the instructions provided at the opening of the account. The escrow officer will confirm all obligations listed in the cover letter and the escrow instructions. Then, both the seller and the buyer will sign the necessary documents. This is the start of the actual business transfer.
To close this type of business transaction, the escrow agent has two main objectives:
1. Ensuring the fulfillment of all conditions stipulated in the sale/purchase contract, necessary for the business to continue operating under optimal conditions:
- transferring the contracts, clients, suppliers, employees, etc.
- obtaining permits, approvals, certificates (as required)
- transferring the necessary rental agreements or property certificates
- other conditions specific to each business (stipulated in the instructions)
2. Distribution of authorized instruction funds, including commissions and other financial entitlements:
- the financial synoptic table is being issued; it is a complex document that regulates all payments made in advance by the seller and the buyer’s pending payments, to be made after closing the business transfer.
Due to the factors stated above, the selling price of a particular business will always be higher or lower than that of the initial listing, depending on the particularities of the transaction.
The escrow account closes when all buyer’s and seller’s instructions stipulated in the sale/purchase agreement and its annexes have been followed.
Immediately after closing the transaction, the buyer will receive all necessary information to take over the business, such as operating instructions for the on-site equipment and the seller’s contact information.
Finally, the transfer is over. The business now belongs to the buyer, and the seller can start a new chapter in life (or a new business!).