Drafting Closing Documents and Closing a Transaction

Drafting Closing Documents and Closing a Transaction

The first place to start in preparing to close a merger, acquisition, or consolidation transaction is to review all the conditions to closing set forth in the merger, securities, or asset purchase agreement and create a checklist of the items that are needed prior to closing. Generally, certain certificates and approvals will need to be obtained, documents finalized and executed, filings made with applicable government and regulatory entities, and monies paid or securities issued as consideration. Board or shareholder approvals will be required in most transactions to effect the transaction, in addition to any contractual or statutory requirements that may have to be met. If opinions of counsel are to be supplied by each party to the other party, the law firms supplying the opinions will need to complete due diligence.
 
Accordingly, preparations for closing should begin at the start of the drafting process for the principal documents of the transaction. In most cases, a good standing certificate from the State Division of Corporations from jurisdictions for all parties involved and possibly other states in which the corporation does business will be necessary. Any required consents to the transaction should be solicited well in advance of the anticipated closing to avoid unnecessary delays.
 
In large deals involving investment bankers, the accountants will supply a comfort letter that backs up the investment bank's fairness opinion. Drafts of such documents need to be provided as early as possible in the process to ensure that issues can be resolved prior to closing. In a merger transaction, a certificate of merger must be filed with the state’s Department of State, and may be necessary in other jurisdictions should foreign entities be involved.
 
Checklist for Negotiating and Closing Transaction 
 
·        Negotiate purchase, sale, or merger agreement.
·        Negotiate ancillary agreements.
·        Draft closing documents and closing transaction.