Closing day may mark the official transfer of a business, but it’s not the end of the road. Many responsibilities, obligations, and deliverables arise after the deal is signed, and failing to manage them can undermine everything the parties worked for.
At Hadri Law, we help buyers and sellers navigate post-closing obligations to ensure a smooth transition and ongoing legal compliance.
Why Post-Closing Matters
Even after the funds are wired and documents are signed, both sides often remain tied by key obligations such as:
- Delivering final closing deliverables
- Settling adjustments (e.g., working capital)
- Transitioning employees and operations
- Resolving indemnity claims
- Completing registrations and filings
Common Post-Closing Obligations
1. Purchase Price Adjustments
These typically occur shortly after closing and involve recalculating:
- Working capital
- Net debt
- Other agreed financial metrics
If actual values differ from the estimated amounts at closing, the price may be adjusted accordingly, with payment owed by one party to the other.
2. Indemnification Period
The buyer may bring a claim if the seller breached a representation or warranty, subject to the survival period and caps outlined in the purchase agreement.
Sellers should:
- Monitor the indemnification timeline
- Track any claims or notices submitted
- Cooperate during dispute resolution
3. Earn-Outs or Deferred Payments
Some deals involve future payments based on the business’s performance. Post-closing, the seller may be entitled to additional amounts depending on:
- Revenue or profit targets
- Customer retention
- Milestone achievements
These payments often require ongoing collaboration and data sharing between the parties.
4. Employee Transitions
Whether by way of an asset or share purchase, post-closing may involve:
- Issuing new employment contracts
- Transferring benefits plans and seniority
- Addressing termination or re-hiring logistics
At Hadri Law, we assist clients with the employment law side of M&A integrations to ensure compliance and minimize disruption.
5. Regulatory Filings and Notifications
Depending on the deal structure, you may need to file:
- Corporate structure changes with regulatory bodies
- Updated ownership information with licensing authorities
- Notices to tax or employment regulators
We help ensure all necessary post-closing filings are submitted on time.
Best Practices for Managing Post-Closing Obligations
- Create a Post-Closing Checklist: List all tasks, responsible parties, and deadlines.
- Appoint a Deal Captain: Assign someone on each side to oversee deliverables and coordinate with advisors.
- Review Indemnity Provisions: Understand when claims can be made and what documentation is needed.
- Maintain Open Communication: Cooperation between buyer and seller post-closing avoids costly misunderstandings.
- Track Earn-Out Metrics: Ensure transparency and proper calculation to prevent disputes.
How Hadri Law Helps
Hadri Law offers comprehensive post-closing legal support to:
- Monitor and enforce indemnity obligations
- Draft post-closing undertakings and certifications
- Coordinate with tax and accounting advisors
- Manage ongoing compliance and reporting
- Assist with employment and operational integration
Final Thoughts
Closing the deal is just the beginning. From compliance and employee transitions to final payments and claims management, post-closing obligations can have lasting consequences. Ensuring they’re clearly defined, actively managed, protects your investment and strengthens your business relationships.
Book a free consultation or reach us at 437-974-2374 Email: contact@hadrilaw.com to get started.