What happens on closing day, and in the weeks after?

The closing agenda

A closing agenda is the list of every document, consent, certificate and payment needed to close, who produces it and whether it has arrived. For an asset purchase it includes the bill of sale, assignments of the lease and contracts, landlord and franchisor consents, the s. 167 election form, employee offers and the seller's bring-down certificate confirming the warranties are still true on closing day. For a share purchase it adds share transfers, resignations, new director and officer resolutions and the minute book.

Most closings now happen electronically, with documents signed in escrow and released once both lawyers confirm funds. A well-run agenda makes closing day uneventful.

Funds flow and adjustments

The purchase price rarely moves as a single payment. From it come the deposit already held, the holdback going to escrow, the vendor take-back note, payouts to creditors with registered security so their registrations can be discharged, and the statement of adjustments. Adjustments settle items that straddle closing: prepaid rent and deposits, utilities, inventory counted the night before, employee vacation pay if assumed, and any working capital adjustment.

We prepare the direction re funds and reconcile every dollar with the seller's lawyer before wiring. Confirm any change in payment instructions by phone to a known number; wire fraud targets closings.

Registrations and filings after closing

Immediately after closing we register the lender's and any vendor security under the Personal Property Security Act, confirm discharges of the seller's registrations and, for a share purchase, file the notice of change for the new directors and officers. The buyer files the s. 167 election with its HST return for the reporting period that includes closing; a missed filing means HST is payable. Any s. 22 election on receivables is filed jointly with the income tax returns.

Licence transfers, business name registration, insurance and bank signing authorities are confirmed in the same week. A closing report from us lists what was done and what remains diarized.

The transition period

Most agreements give the buyer a period of the seller's time after closing, from a couple of weeks to several months, for training, introductions to customers and suppliers and answering questions. Set out in writing what the seller will do, for how long, whether it is paid and whether the seller is an employee or a contractor during that time. Keep the transition separate from any vendor take-back so that one does not become leverage over the other.

The seller's non-competition and non-solicitation covenants start on closing. In a sale of business they are generally enforceable if reasonable in duration, geography and scope.

If something is wrong after closing

Warranties survive for the period the agreement sets, and the indemnity clause tells you how to claim: usually written notice within a set time, with details, and a process before any deduction from the holdback or set-off against the vendor note. The Limitations Act, 2002 imposes a basic two-year limit from discovery for court claims, and the agreement may add its own shorter notice periods. Keep a file of what you find and when, and talk to us before you withhold a payment; withholding without a clear contractual right can put you in default.