Closing the Deal

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After a successful due diligence, the buyer will move to close the deal. This is the process that involves several parties, including:

1. closing attorneys:
   this may involve an independent closing attorney representing both parties; usually the buyer and seller will have their respective attorneys involved to review closing documents.
   
   
2. financing lenders:
   generally the buyer may require financing from a lender or other party.
   
   
3. others:
   respective parties such as your broker.

The closing may require agreements on several fronts:

• how will the buyer finance the purchase:
  
  if the buyer is doing an outright purchase (either through an investment or lender financing), this may not be an issue. But in many cases, you will find that the buyer may require seller financing.
  
  This involves you financing a portion of the purchase under negotiated terms of 5-10 years. This is not a bad option, since it will give you the right to assume back the business if the buyer fails to meet their payment obligations.
  
  
  
• will the seller remain with the company during the transition:
  
  it is common for the seller to assist the buyer during the transition. This is particularly common if the business have distinct customer contracts or brand name recognition.
  
  You need to negotiate with the buyer your role, the time required for the transition, and fee. In most cases, the seller will receive a per diem fee for assistance.
  
  
  
• non-compete clause:
  
  in some cases, the buyer may request a non-compete clause that prevents you from competing against the buyer for a period of time (usually 1-2 years).
  
  
  
• use of your brand name:
  
  if you business success carries the name of the seller; i.e., Smith's Auto Parts, the buyer may negotiate a period of time where they can continue to use your name while they build up the new brand.
  
  This may involve joint name in the brand: Smith & Wesson
  
  to be followed by: Wesson & Smith
  
  to be finalized by: Wesson
  
  Again, this may involve a year or more and is generally included in the goodwill price of the company.
  
  
  
• other:
  
  there are many other issues that may require representation from a broker to protect your interest.