What happens on closing day when I sell my business?

The closing agenda and what you deliver

A closing agenda lists every document, consent and payment needed to close and who is responsible for it. As seller you typically deliver the bill of sale or share transfers, assignments of the lease and key contracts, any landlord consent obtained, resignations and releases, and a bring-down certificate confirming your representations and warranties are still true on closing day. Discharge statements for any registered security must be ready so the buyer's lawyer can confirm nothing outstanding survives the sale.

Most closings happen electronically now, with documents signed in escrow and released once both lawyers confirm funds have moved.

Funds flow and the statement of adjustments

The price rarely arrives as a single payment. From it come payouts to anyone holding registered security so their registrations can be discharged, any holdback going into escrow, a vendor take-back note if you agreed to finance part of the price, and the statement of adjustments, which settles items straddling closing such as prepaid rent, utilities and inventory. Confirm any change to payment instructions by phone to a known number; wire fraud specifically targets closings.

The landlord's consent and lease assignment

If the business operates from leased premises, the landlord's written consent to assign the lease is usually a closing condition, and under s. 23 of the Commercial Tenancies Act it cannot be unreasonably withheld unless the lease says otherwise. Landlords often want a release of your own covenants and any guarantor role in exchange for consenting; unless the landlord agrees in writing, you may otherwise remain liable on the lease after the assignment, so negotiate that release as part of the closing package rather than as an afterthought.

The handover period and your ongoing covenants

Most agreements include a period, from a couple of weeks to several months, during which you train the buyer, introduce it to customers and suppliers, and answer questions. Set out in writing what you will do, for how long, and whether you are paid for it as an employee or a contractor during that time; keep it separate from any vendor take-back so one does not become leverage over the other.

Your non-competition and non-solicitation covenants start on closing and are generally enforceable in a sale of business if reasonable in duration, geography and scope; know exactly what you agreed to before you consider your next move.