Selling a Business – Completion Day
Selling a Business. A day in the life at … Continuum Corporate Lawyers
When it comes to selling a business, the completion day is the most important part of the entire share sale process. This is the point at which the monies are paid to the seller(s) and the shares in the target company are transferred to the buyer.
As corporate lawyers, specialising in the buying and selling of businesses, completion day is what we work towards. It is the culmination of the whole process of selling a business. However, despite our best efforts, the day of completion will often throw up many challenges for all involved, and we need to be ready to deal swiftly with all eventualities, to get the deal over the line. This article is by Andrew Ward, one of our corporate lawyers. It gives a flavour of how a completion day can pan out.
9am – The Deal Must Complete Today
It is the date of targeted completion for the sale of a company and Continuum are acting for the sellers. Due to the upcoming absence of various key persons from the buyer and seller for the next three weeks after today, it is imperative to the parties that the deal completes today or else it risks being delayed for another month.
At this point in the day, the legal documentation is almost in an agreed form, however, the buyer’s solicitors have yet to confirm receipt of funds from the bank who are financing the transaction, despite being chased several times.
To Speed Things Up, a Remote Completion is Agreed
Since the sellers are tied up with running the company today (it is a normal business day), the buyer’s solicitors and Continuum have agreed to a “remote” completion, whereby the solicitors exchange signed copies of their client’s documents by email and confirm completion of the transaction over the phone (as opposed to a usual “round–the-table” meeting between the parties).
11am – A Lively Phone Discussion With the Buyer’s Solicitor
Continuum and the buyer’s solicitor have a call to finalise and agree in principle the legal documents. Following a lively discussion, they agree to drop a key point in relation to disclosure of the data room documents, and the documents can now be put in final form. The buyer’s solicitor agrees to send us engrossed versions for signing. However, they have still not received the completion monies from the bank.
12pm – One Shareholder is Unexpectedly Out of the Country. We Draft a Signing Power of Attorney
We learn from our client that one of the other shareholders is unexpectedly out of the country on business and is unable to print and sign the many documents he needs to sign. To get around the problem, we draft a “signing power of attorney” for him to execute – this single document grants another shareholder authority to sign the documents on his behalf. The absent shareholder is able to execute the power of attorney accordingly and send a picture of the signed document from his phone as delivery.
1pm – We Send Signed Documents to the Buyer’s Solicitor
With the power of attorney now in place, the documents are emailed to the other shareholders for them to sign. The shareholders sign, scan and return all the sale documents by email. We check that the documents have been signed correctly and then forward them to the buyer’s solicitor, which are then held to our order pending completion. We chase for their signed counterpart documents and for an update on the funds.
3pm – The Buyer is Not Yet in Funds – We Might Run Out of Time to Complete Today
The buyer’s solicitors send us their client’s signed counterpart documents, but confirm, worryingly, that they are not yet in funds – without the money we can’t complete the transaction! There is concern that the transaction won’t complete today.
4.30pm – Funds are Received, But After the Deadline. We Find a Solution
The buyer’s solicitor finally confirms that they have received the completion monies from the bank, however, as we are past 4.30pm, the cut off point for transferring the monies to our client account has been missed. Continuum and the buyer’s solicitor agree that we can complete on an undertaking from the buyer’s solicitor.
5.30pm – A Further Issue Arises. The Buyer’s Solicitor Agrees to an Unconditional Undertaking
We receive a draft undertaking from the buyer’s solicitors that they will transfer the monies on completion of the transaction, subject to the bank releasing the money to them. This is not acceptable – it must be an unconditional promise to transfer the monies – otherwise the deal could complete and the bank may not subsequently release the monies to the buyer!
Following detailed negotiations with the buyer’s solicitor, they agree to provide an unconditional undertaking provided the bank’s lawyer is on the completion call.
6.30pm – We Receive the Signed Unconditional Undertaking
We finally receive the signed undertaking from the buyer’s solicitors, and we are thereafter in a position to complete the transaction. A call is scheduled for 7pm to confirm completion of the deal with us and the buyer’s and bank’s solicitors.
7pm – The Deal Completes – Congratulations all Round
We have the call to confirm completion of the transaction. The buyer’s solicitors undertake that they will transfer the money to our client account, and from there we can arrange for payments to be made to the shareholders.
We call the clients to confirm that we’ve completed and to congratulate them on a successful sale. Everyone breathes a sigh of relief!
Selling a Business is a Complex and Detailed Process. Talk to us for Help and Advice
As this article shows, the completion date when selling a business can be a stressful experience. It’s experience and determination that win the day. Click here to see some testimonials from clients who have been pleased with our work.
If you are considering selling a business, or buying one, please contact us or call us on 0121 214 2490 for a FREE initial chat.