- A bank account and a merchant processing agreement are contracts between the seller — a specific legal entity — and a financial institution or processor.
- - [ ] Confirm the deal structure (share vs.
- On closing day, purchase funds typically flow through the parties' lawyers, with adjustments made for items like prepaid expenses, accrued liabilities, and any working-capital true-up…
Closing on a business purchase is a legal milestone, but it isn't the same thing as being ready to actually run the business the next morning. One of the most common gaps between "the deal is signed" and "we're operating" is banking: a buyer generally can't simply start using the seller's existing bank accounts or payment terminals, because financial institutions and payment processors run their own underwriting on whoever is actually operating the account.
This article walks through opening a business bank account and merchant processing around a business purchase — what to line up before closing, what happens with money on closing day, and what to clean up afterward.
Why You (Usually) Can't Just Use the Seller's Accounts
A bank account and a merchant processing agreement are contracts between the seller — a specific legal entity — and a financial institution or processor. In an asset sale, the buyer is a different legal entity, so it generally needs its own accounts and its own merchant agreement, underwritten independently of the seller's history. Even in a share sale, where the corporate entity doesn't change, banks and processors typically still want updated signing authorities and ownership disclosure once control of the business changes hands — financial institutions have their own know-your-client obligations that don't disappear just because the underlying corporation is the same one on file.
Before Closing: What to Line Up
- [ ] Confirm the deal structure (share vs. asset) — this decides whether new accounts are legally required or mainly an administrative update
- [ ] If you're buying assets, make sure your own operating entity is incorporated or registered in time to open accounts under its name
- [ ] Apply for a business bank account with your chosen institution well before closing, since underwriting takes time you don't control
- [ ] Apply for merchant processing or payment terminal service in the buyer's name — some processors will consider the business's existing transaction history, others will underwrite the buyer fresh
- [ ] Coordinate with the seller on any merchant equipment that's leased rather than owned, since that equipment may need its own transfer or replacement
- [ ] Understand how the purchase agreement's working-capital adjustment mechanism will treat cash and receivables sitting in accounts as of the closing date
At Closing: Money in Motion
On closing day, purchase funds typically flow through the parties' lawyers, with adjustments made for items like prepaid expenses, accrued liabilities, and any working-capital true-up built into the purchase agreement. If part of the price is being held back or placed in escrow to secure post-closing indemnity claims, that arrangement runs separately from the buyer's own day-to-day operating accounts — it doesn't substitute for having your own banking in place to actually run the business.
After Closing: Don't Let This Slip
Once the deal is done, a few things are easy to forget in the rush of actually operating the business:
- Update automatic payments, payroll deposits, and e-transfer contacts to the buyer's new accounts
- Reconfigure point-of-sale systems and online payment gateways under the buyer's own merchant credentials
- Confirm bank and processor statements are flowing to the right people going forward
- Close or transition any of the seller's accounts that were specific to the sold business, once the transition period has run its course
Frequently asked questions
Can a buyer negotiate to keep the seller's existing merchant processor?
Sometimes a buyer can apply to the same processor and get underwritten in its own name, especially if the processor is willing to consider the business's transaction history. But this is a new application under the buyer's own identity — it isn't the same as simply inheriting the seller's existing merchant account.
What happens to the money already in the seller's bank account at closing?
That generally belongs to the seller unless the purchase agreement specifically treats certain cash or receivables as part of the deal (for example, through a working-capital adjustment). This is exactly the kind of detail that needs to be spelled out clearly in the agreement rather than assumed.
Do we need a new bank account for a share purchase too?
Not legally, since the corporation and its accounts continue unchanged — but in practice, most buyers still update signing authorities, online banking access, and sometimes the institution itself once they take over management and control.
How does a holdback or escrow interact with the buyer's own banking setup?
A holdback or escrow is a separate pool of funds tied to the purchase agreement's indemnity provisions — it's meant to secure the buyer against post-closing claims, not to fund day-to-day operations. The buyer still needs its own operating accounts and merchant processing in place independently of whatever holdback arrangement is negotiated.
This is a business purchase or sale question
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