It has been our experience that when the pre-diligence and preparation has been thorough, when the right business and its owner and the right buyer have discovered each other, when they have spent the time and effort to understand the opportunity each represents to the other, the Offer to Purchase is a detailed but easy next step.
Similarly then, when access has been open and due-diligence has proven the opportunity, closing the sale on the terms agreed in the Offer to Purchase is simply a matter of document preparation, and then the sale closes quietly with the execution of closing documents and the exchange of consideration.
For reasons described below, we recommend closing documents be prepared by a lawyer neutral to both buyer and seller.
Often, an agreement that has been cooperatively negotiated between buyer and seller, one considered balanced by both parties will be taken to the lawyer for one party or the other, (generally the lawyer for the buyer), who will draft closing documents that are not balanced but distorted in favor of that lawyer’s client. That change will generally come as a offensive shock and not well received by the other party who thought they already had a deal. And many times, the deal can break down on that point of disagreement and never get back on track. Other times, the two lawyers may battle it out in order to renegotiate the deal that had already been satisfactory to the parties, while the timeclocks of both are running.
The objective of the neutral closing lawyer will be to close the agreement already crafted in the Offer to Purchase. The objective will not be to renegotiate or change the body of the agreement negotiated by the parties, but simply to conduct the necessary legal searches required to ensure clear and transferable title of all that is to be transferred in the sale, and to translate the agreement of the parties represented in the Offer to Purchase into the legal documentation and structure to close the sale.
The neutral lawyer can be expected to mitigate the legal matters of the agreements and of the transition contemplated, but to carry no tendency toward the one party’s interests over the other. A neutral lawyer will be in position to provide a truly balanced approach to the preparation of the closing agreements.
Then, in sufficient time prior to the Closing Date, the documents drafted by the neutral lawyers will be forwarded to the lawyers for both the buyer and the seller so as to provide both ample time for review and to advise their respective clients, and if necessary, recommend changes to their clients and to the neutral lawyer as they may deem appropriate.
The advantage to both parties is typically a balanced agreement, the absence of conflict, lower closing costs and, in the end, a deal that does close.