What Is Deal Closure?
Deal closure is the business term for when an acquisition or sale has been finalized and both parties have come to a final agreement. This may occur via negotiation, merger, or in some other way depending on the situation. Fintalent’s deal closure consultants often consummate the deal by filing a document with government agencies, such as the SEC ( Securities and Exchange Commission ), that formally allows for the deal to go through. Not all deals reached an agreement at this stage of their process, but these involve legal contracts which can take months to complete.
Deal Closure Costs to Consider
When an acquisition is finalized, one of the main things that both the buyer and seller must consider are closing costs. These cover all of the expenses incurred during this process; they include legal fees, filing fees, accounting costs, and any other administrative fees involved with formalizing a sale. The total amount can be substantial (hundreds of thousands of dollars), especially when companies are merging and have to combine company operations. Although many people often overlook these costs, it’s well worth understanding them because they can make or break a deal. If one party does not plan ahead for these costs and does not set aside enough money to handle them then there could be a serious problem down the line.
Closing a Deal
The first step in closing a deal is for the buyer and seller to come to an agreement on price. This involves determining the final value of the acquisition, as well as what other factors may influence this outcome (i.e. interest rates, additional assets on the side of either party). Once these factors have been considered and accepted by both sides, they can begin discussing how they are going to pay for the deal and how they will handle creating ownership documents (i.e. legal papers which must be filed with government agencies).
Whether it’s a purchase or sale, one of the key parts of a deal is getting it properly documented. Once the process has begun, they must follow all procedures set forth by federal agencies and any other applicable laws in order to ensure that the entire deal process is completed correctly. The goal is to ensure that both parties are protected if there are any disputes down the line, and that they protect their own assets as well.
The Process
Typically deals are structured as an acquisition (buyer takes over buyer) or a sale (seller takes over seller). However there may also be other types of mergers or joint ventures which involve different types of companies. The deal process begins when both parties start negotiating the final price of a sale. This is usually done by using comparable companies as an example, and may also involve a pricing agent who can help establish this value. Once they have agreed to a final price then they must consider what financial terms are going to be used.
Once the buyer and seller have agreed on price, it is time for them to begin negotiations about which assets will be sold and what kind of ownership documents are involved with the transaction. These may include legal contracts or other documents that must be filed with federal agencies in order for the deal to go through. If there are any issues relating to any assets owned by either party then these must also be resolved before finalizing anything.
Once this process is complete, the buyer and seller have come to an agreement about what steps need to be taken. A formal agreement will then be signed to officially close any deal. This document should cover everything in the original final price, including all of the relevant financial terms and ownership documents.
