Buying a Business: The Closing Process
The closing process is the final step in buying a business. The closing process includes several items before the business transaction is complete. First, the buyer and seller will sign the sales agreement. Next, the buyer will pay the agreed-upon terms/down payment of the transaction. Last, the transfer of the business is completed. These are the final steps in the purchase process which means it is the last chance to correct any issues. The closing process can be nerve-wracking. To avoid problems, prepare in advance for the closing day.
At Peak Business Valuation, we offer business valuations that determine a fair market value. Knowing the value of the business is key to negotiating a fair purchase price. Before buying a business, it is important to obtain a business valuation. A business appraisal can help you be confident in the business transaction. It will also help you understand the in-depth details of the business. Our business appraisers at Peak Business Valuation are happy to answer any questions you have. Schedule your free consultation using the link below.
Who, When, and Where
First, we will discuss the who, when, and where of the closing process. On the closing day, usually, only the seller and buyer need to be present. But sometimes, it is valuable to have other individuals in attendance. Some of those individuals include your spouse, lawyer, notary, or other owners of the business.
The best time to schedule a closing date is in the middle of the week. This is because banks and government offices are open during the week. Another thing to consider is the time of the month. In a business transaction, taxes are prorated, so the beginning of the month is often better.
There are several places that are suitable to meet at for the closing day. The first one is a lawyer’s office. This will cut costs as the lawyer won’t have to travel. You can also hold it at the business location. The best scenario is to pick a quiet place to work through and sign the closing documents. Ensure wherever you meet that there is a copy machine and printer in case changes need to be made. If neither of these locations works, select another place that suits your needs.
Documents
Next, the documents necessary for an asset sale and an entity sale are different. Because of this, the seller and buyer should agree on a checklist to ensure everything is transferred and taken care of. The sales agreement should disclose most, if not all, of the items on the checklist.
No two business transactions are the same. Because of this, it is important to pay close attention to the specific documents each business sale needs. As there are multiple documents needed, we will not discuss the specifics.
Dealing With Last-Minute Issues
Often problems tend to arise at the last minute. As a buyer, do your best to prepare as best as possible. If this is your first time buying a business, consider having your lawyer present. The lawyer can help make the process go more smoothly. Make sure you have the proper documents ready to go. Create a checklist of the things you need to look over at the time of closing. Last, make sure you have the correct people in attendance that need to be at the closing.
Summary
When buying a business, closing the deal is the last step. Then you will walk out a new owner of a business! This can be both exciting and scary. Be sure to prepare in every way possible. Agree on the terms of the sale with the seller, prepare proper documents, and double-check everything with a lawyer.
Whether this is your first or fifth time buying a business, each business transaction is different. Because of this, it is important to pay close attention to detail. The closing process can be very meticulous. Being prepared for that day will help it go as smoothly as possible. And if it doesn’t, be prepared to handle any last-minute issues that may arise.
Buying a business is a large endeavor that can drastically impact your life now and in the future. A business valuation can help you feel confident in the process. Peak Business Valuation, business appraiser, is the highest-rated, most reviewed business valuation firm in the country. We provide business valuations that not only assess the fair market value but the ins and out’s of the business. A business valuation is a great way to ensure that the business really is what they say it is. For more information schedule a free consultation below. We look forward to working with you.
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