The Big Question
What Happens on Closing Day?
The Short Answer
Less than people expect, and almost none of it is a surprise. A closing is a set of conditions cleared in the days before, a signature packet executed on the day, and a wire that moves once the closing agent holds everything the lender asked for. Many small-business closings happen without anyone in a room together.
The day is mechanics. Everything that decides whether it goes well happened earlier: the diligence findings, the lender's conditions, the consents from landlords and licensing bodies, and the agreement on what the business is carrying when it changes hands.
What Has to Be True Before the Day
The lender closes when its file is complete, which is why the file is worth assembling early rather than chasing at the end. What the Loan File Contains is the working list, and the items that catch first-time buyers are the ones that need somebody else to act: lease assignment from a landlord, any license or franchise consent, insurance bound in the buying entity, and seasoning of funds on the cash you are injecting.
The other pre-condition is arithmetic. What you owe at the table is the price plus the costs plus the working capital the business needs on day one, and Sources & Uses reconciles that to the dollar against where every dollar comes from. A closing that is short is nearly always short on that line rather than on the price.
What You Actually Sign
The packet varies with the structure. In an asset sale, which is how most small-business purchases are written, the operative documents are a purchase agreement, a bill of sale for the tangible property, and an assignment and assumption agreement for the contracts moving across.
Around those sit the financing and the promises. An SBA borrower signs a personal guarantee, the lender files a UCC-1 over the business assets, any seller financing is documented as its own note, and the seller's promise to help afterwards is a transition services agreement rather than a handshake.
Where the Money Goes
The funds flow is the statement that says who receives what, and it is worth reading line by line the day before rather than at the table. It nets the price against payoffs of the seller's debt, prorations, closing costs, any holdback held back against a known risk, and the working capital peg true-up if the agreement sets one.
That last one is where money moves after the day and surprises people: if the business hands over less working capital than the agreement promised, the difference is owed, and if it hands over more, it may be owed the other way.
The Morning After
Ownership starts before the paperwork is filed. Payroll has to run, the bank accounts have to receive, the staff have to hear it from somebody, and the seller has to be reachable. The First 100 Days sequences that from closing day forward, and Seller Transition Terms is where the seller's remaining obligations were priced.
One thing to settle before you sign rather than after: successor liability decides which of the seller's obligations follow the business to you, and it turns on the structure you chose several weeks earlier.