Closing a Business Sale: Conditions Precedent, Escrow and Completion Day

Quick answer. Closing is the day the sale actually completes: transfer of the shares or goodwill and payment of the price. It takes place once the conditions precedent set in the protocol (financing, approvals, due diligence) are satisfied. Part of the price may be held in escrow to back the representations-and-warranties guarantee. A well-prepared closing, with a precise checklist, avoids last-minute deadlocks.

In a structured sale, two dates matter. Signing is the signature of the agreement protocol, by which the parties commit to sell and buy, subject to conditions. Closing, or completion, is the day the deal actually executes: signing the final deed, transferring ownership and paying.

Between the two runs a period, often a few weeks to a few months, devoted to satisfying the conditions precedent. When signing and closing coincide (simultaneous closing), it means no condition remains outstanding. This sequence extends the logic begun with the letter of intent and ends with the final sale deed.

A condition precedent is a future and uncertain event on which performance of the obligation depends (Article 1304 of the Civil Code). Until it is met, the sale produces no effect; if it fails, each party is in principle released. The most common in a business sale are:

Each condition must be drafted with a deadline and a method of confirmation. A vague condition — "subject to satisfactory due diligence" — invites disputes; it is better to set objective thresholds (for example, an undisclosed liability above a defined amount).

A sale almost always comes with a representations-and-warranties guarantee, by which the seller warrants the accuracy of the situation presented and indemnifies the buyer if a pre-existing liability surfaces after the sale. That guarantee itself needs backing: this is the role of escrow.

A fraction of the price (often 5 to 15%) is deposited in an escrow account held by a third party — lawyer, notary or bank. Conventional escrow is the deposit of a disputed asset in the hands of a third party who undertakes to return it, once the dispute is settled, to the person judged to be entitled (Article 1956 of the Civil Code). In practice, the escrowed sum is released to the seller only at the end of the guarantee period, net of any indemnities owed to the buyer. Failing escrow, a bank guarantee or first-demand guarantee can play the same role.

Closing is choreographed, with every document ready. Our model checklist:

1. Confirm all conditions precedent are satisfied and record the evidence.
2. Fix the final price after applying any price-adjustment mechanism.
3. Sign the final sale deed and the share transfer orders (or the goodwill sale deed).
4. Update the share transfer register and shareholder accounts.
5. Make payment: transfer the price, deposit the escrowed fraction, set up the vendor loan where relevant.
6. Sign the ancillary deeds: representations and warranties, support agreements, resignations and appointments of directors.
7. Complete the formalities: registration, filing with the registry, declarations.

The period between signing and closing is a countdown. Each condition precedent should be tracked like a project milestone, with an owner and a deadline. The financing condition is often the longest: the buyer must close their bank funding, which requires a solid file and reliable reference accounts. Approval conditions (bylaw consent, a co-shareholder's pre-emption right, the landlord's agreement for a goodwill sale, merger-control clearance for large deals) depend on third parties and must be triggered without delay.

To stop a condition from sinking the deal, the protocol sets a long-stop date beyond which each party may withdraw, along with the consequences of a culpable failure. Weekly tracking, shared between the seller, the buyer and their advisers, turns this uncertain period into a controlled process. It is also the time to finalise the drafting of the representations and warranties and settle the escrow terms, so nothing remains to negotiate on completion day.

Sale of goodwill. The price of a goodwill sale is necessarily escrowed for a legal lock-up period, so creditors and the tax authority can exercise their rights. The seller receives the price only at the end of that period.

Sale with earn-out. Part of the price depends on future results; closing then sets the calculation and deferred-payment terms, distinct from the guarantee escrow.

Multi-condition closing. Where several approvals are required (competition, consent), the timetable must set an order of satisfaction and a long-stop date beyond which the deal falls.

• Draft measurable conditions precedent, with a deadline and method of proof, rather than vague wording.
• Size the escrow against the real liability risk, and clearly set its duration and release terms.
• Align the tax calendar: the gain is taxed in the year of closing, at 31.4% for a sale of shares in 2026; plan the matching cash.
• Prepare all ancillary deeds upstream: a closing rarely fails on the main item, often on a missing accessory document.

Recently, a closing we were supporting nearly derailed the day before signing: the buyer's financing condition was only partly satisfied, and the escrow duration had not been settled. We proposed splitting the payment and extending the guarantee escrow, which allowed signing the next day without giving ground on price.

Closing is the last mile, where months of negotiation either materialise or are lost. Our role as chartered accountant and statutory auditor is to bring the rigour of figures: reference accounts, price-adjustment calculation, consistency of the escrow with the guarantee. Preparing this last mile means making sure no accessory point derails the essential one.

We stress a point too often neglected: coordinating the participants on completion day. A closing brings together the seller, the buyer, their lawyers, sometimes the bankers and the escrow agent. Each must have their final version of the deeds, the share transfer orders and the evidence that conditions are satisfied. A single missing document — minutes of appointment, a release of pledge, a bank details form — can push back the signing and undermine a carefully built balance. We therefore prepare, upstream, a complete closing file and a shared checklist, reviewed point by point the day before. And because signing triggers payment, we check that the financial flows — price, escrowed fraction, any vendor loan — are ready to be executed in the right order. The seller, for their part, leaves with a certainty: the price is secured, the guarantee is framed by the escrow, and the deal is legally complete.

Hayot Expertise advice. Never approach a closing without a checklist shared between the seller, the buyer, the lawyer and the accountant. Gather the ancillary deeds and proof of satisfied conditions several days ahead, and settle the escrow's duration and terms in writing. We coordinate this preparation so that completion day is a formality.