The Letter of Intent (“LOI”) was signed more than 90 days ago and now closing is scheduled in a few days. The due diligence and scrutiny since the signing of the LOI has been intense. The Purchase Contract has been revised numerous times based upon the findings discovered throughout the due diligence process, some favorable and some not.

Now that closing is near, will all go well at the closing table? Unfortunately, No! The devil is in the details or more appropriately the “schedules.” Almost all covenants and warranties have reference to a schedule and these schedules may have errors of omission, be incomplete, wrong or new information brought to the light of the buyer or seller. In addition, some verification process may have recently been completed, such as, agreement on obsolete inventory or product warranties outstanding.

Rarely does one find a material item that will be a deal breaker. Most may be considered “nuisances,” but they need to be resolved at the table and during the signing process. Some issues may result in the closing being held in escrow until resolution has been made.

The more experienced your team of advisors, attorneys and accountants in addition to those of the buyers, plus having the benefit of a sound operating company, go a long way in eliminating any surprises and delays.

Follow-up is mainly focused on any price adjustors; such as:

• working capital thresholds
• collectability of accounts receivable
• customer contract renewal
• patents or copyrights files

Other follow-ups may deal with lease renewals, employment contract provisions, and terms of payments on subordinated notes to seller.

The most important follow-up is how is the proceeds from the sale is invested and are your enjoying your new life.

This is the eleventh post in a series of eleven blogs on the selling process. For more information on S&K Transitional Services please contact info@stark-knoll.com.