CARY, N.C. – Signing and closing a merger, acquisition, joint venture, licensing agreement, or other strategic transactions involves many moving parts that are often overlooked or not fully understood for their complexity.
In most transactions, the final agreement is not simply one contract drafted and negotiated by the lawyers, and then signed by the parties at closing. A more typical final “agreement” is a package of documents that includes the main contract, a long list of schedules and disclosures of items related to the business, employment agreements with key individuals, board and shareholder resolutions, and approvals or consents from third parties. In an ideal situation, the “seller” in the transaction hopefully began preparing for the ultimate closing before negotiations even began. A seller can help to streamline the closing process by preparing and organizing the typically required documents in advance. In the real world, it is often very difficult for small or midsized companies to devote the resources required to prepare this type of information in advance of the final rush just prior to the scheduled closing date.
The closing process is part legal, part business, part negotiating savvy, and a large part project management. Project management is a significant part due to what appears to be an endless number of different agreements that must be finalized, schedules that must be created, approvals or consents from third parties that must be obtained, and corporate approvals that are required. Managing and scheduling the process of completing all the required documents in a coordinated and timely manner will test the project management skills of both your attorney and your organization.
Here are 10 items to consider when planning for the close of your transaction:
Remember, the “negotiations” are not done just because the agreements are signed and closing has past. It is common that the parties to a transaction will have items and issues pop up after closing. Be prepared to keep negotiating, if and when required.
As a final point, the closing of a transaction is often an inflection point in the relationship between the parties. Prior to the closing, each party is primarily focused on protecting their own interests and getting the best terms for their side in the final agreements. Once the transaction is closed, the parties often have an ongoing working relationship where their success or failure is now tied together. Making this transition from “adversaries” to “collaborators” can often be difficult, especially if the negotiations were difficult. A smooth closing, that also includes an element of celebration, can assist the parties in making this transition, while a poorly organized closing can have the opposite result.
This article was submitted for publication by COIN by member REVOLUTION LAW. It is meant for educational and guidance purposes only.
Editor’s note: The information contained in this article, and in material referenced within, is intended for informational and educational purposes only, and does not constitute legal, financial, accounting, or other professional advice.
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