Closing
Final step of a transaction where ownership of the business is officially transferred to the buyer, funds are released, and all legal documents are signed.
Definition
Closing is the moment a business sale becomes official. It’s the final step of the transaction process: legal documents are signed, funds are transferred, and ownership changes hands. In Quebec, closing usually happens 30 to 90 days after the letter of intent is signed, once all the conditions precedent have been satisfied.
In French-language Quebec documentation, you’ll see clôture used for the same concept.
Closing isn’t a simple exchange of signatures. It involves satisfying multiple conditions — regulatory approvals, third-party consents, financial adjustments — and coordinating lawyers, accountants, financial institutions, and sometimes tax authorities.
Why closing matters in a business sale
For the seller, closing is the culmination of months, sometimes years, of preparation. It’s the day you receive the proceeds of the sale (net of any holdback) and stop being the owner of the business. Despite the agreement in principle reached in the letter of intent, transactions still fail at this stage — which is why rigorous preparation matters.
Last-minute adjustments are common. The working capital adjustment is the most frequent: if the working capital level on the closing date differs from the agreed target, the price is adjusted accordingly. A seller who has accelerated collections or delayed paying suppliers to inflate cash is exposed to a price reduction.
Your broker and legal advisors play a central role in making sure every closing condition is met on time. A delay of a few days can seem minor, but it can jeopardize the buyer’s financing or create uncertainty among employees and customers.
What every seller should know
- Prepare a closing checklist with your broker and lawyer as soon as the letter of intent is signed — the conditions to satisfy are numerous and take time.
- Run the business normally right up to closing. Any drop in performance between the LOI and closing gives the buyer a reason to renegotiate or walk.
- Confirm the fund transfer terms in advance: wire transfer, notary trust account, payment schedule. Banking delays for large wires can reach 48 hours.
- Plan for a post-closing transition period (often 3 to 12 months) during which you support the buyer to ensure continuity of operations, customer relationships, and knowledge transfer.