What Happens on Closing Day When You Sell a Business

Short answer: On closing day, both sides sign the final documents, the buyer’s funds arrive through a closing agent, debts and liens are paid off, and your net proceeds are wired to you before the keys, passwords and accounts pass to the buyer. The stack usually includes the bill of sale, lease and contract assignments, any seller note, non-compete and transition agreements, and the closing statement, which you should review in draft before signing. Confirm wiring instructions by phone, because closings are a target for wire fraud.

You have negotiated the price, survived due diligence, and signed the purchase agreement. Now comes closing day, the moment ownership officially changes hands. For most sellers it is a mix of relief and nerves. Knowing what actually happens on closing day takes a lot of the mystery out of it. Here is a walk-through of how a business sale closes in Florida.

Who is involved in a closing

Most business closings are run by a closing agent, usually an attorney or a title or escrow company, who prepares the closing statement, collects signatures, and handles the money. Around that agent you will typically have the buyer and seller, each side’s attorney, the buyer’s lender if there is financing, and me.

Not everyone has to sit in one room. Many closings are handled with documents signed ahead of time and funds sent by wire, so closing day can be a series of emails and phone calls that ends with confirmation that the money has arrived.

The paperwork gets signed

Closing is largely a signing event. You and the buyer execute the final documents: the bill of sale, the assignment of leases and contracts, any promissory note if you are carrying financing, non-compete and transition agreements, and the closing statement that lays out all the money. Your attorney and I make sure everything matches what was agreed, so there are no surprises in the stack of papers.

Other documents you may see

Depending on how the deal is structured, the stack may also include:

• The landlord’s written consent to the lease assignment, or a new lease between the landlord and the buyer.
• Payoff letters from lenders and equipment finance companies, and lien releases once they are paid.
• Assignments of the business name, phone numbers, website domain, and online accounts.
• A company resolution authorizing the sale, signed by the owners.
• In a stock or membership interest sale, the transfer of the ownership interest and resignations of the selling officers.
• A certificate of compliance from the Florida Department of Revenue showing your state tax account is in good standing.
• The lender’s documents, if the buyer is financing the purchase.

That certificate matters because under section 213.758, Florida Statutes, a buyer can be held responsible for a seller’s unpaid state taxes unless the statute’s conditions, such as this certificate, are met. Many buyers ask for it as a condition of closing. Your attorney prepares or reviews your side of all of these, and getting them approved before closing day is most of the work.

The money moves

This is the part sellers care about most. The buyer’s funds, whether cash, loan proceeds, or a combination, are delivered, usually through an escrow or closing agent. From those funds, any business debts and liens are paid off so the buyer receives clear title, closing costs are settled, and the remaining proceeds go to you. If any money is being held back, it goes into escrow per your agreement. Understanding what happens to your business debt and how escrow holdbacks work ahead of time means no surprises here.

How to read your closing statement

The closing statement is the scorecard for the deal. Ask the closing agent for a draft before closing day and review it with your attorney or CPA. It usually shows:

• The purchase price and any deposit the buyer already paid.
• Adjustments for the final inventory count or other items the contract says get trued up at closing.
• Prorations for rent, utilities, and prepaid expenses.
• Credits to the buyer for money you collected for work the buyer will deliver, such as customer deposits, gift cards, or prepaid services.
• Payoffs of loans and liens, sent directly to the lenders.
• Any escrow holdback, plus the fees and closing costs set out in your agreement.
• Your net proceeds, the amount actually wired to you.

If any line does not match the purchase agreement, raise it before you sign. Fixing a number on a draft is far easier than recovering money after the funds move.

Protect the wire

Closings are a target for wire fraud. Criminals send emails that look like they come from the closing agent, with “updated” wiring instructions. Confirm your receiving account details by phone with the closing agent, using a number you already know rather than one from an email, and treat any last-minute change to wiring instructions as suspect until it is verified.

The keys change hands

Once documents are signed and funds confirmed, ownership transfers. The buyer gets the keys, the passwords, the accounts, and control of the business. Often the final inventory count happens right around now, and any last prorations for rent, utilities, or prepaid items are squared up. Then your transition period begins, where you help the new owner get up to speed.

Loose ends to close out beforehand

In the final stretch before closing, a few items tend to decide whether closing day goes smoothly:

• Confirm that the landlord’s consent and any license or permit transfers are approved and in hand.
• Request payoff letters early from every lender and equipment finance company.
• Schedule the final inventory count with the buyer and agree on how it will be done.
• Plan the final payroll, and decide with the buyer how and when employees will hear the news. My post on what happens to employees when you sell covers the options.
• Keep your business insurance in force through closing, and cancel it only after ownership transfers.
• Gather keys, alarm codes, passwords, vendor contacts, and operating notes in one place.

What you should do to prepare

Come to closing with everything organized: final financials, keys and access, and any items promised in the agreement. Make sure you understand your net proceeds figure ahead of time so the closing statement holds no surprises. A well-prepared seller makes closing day smooth and even enjoyable.

Your first tasks after closing

Signing is not quite the end. A few seller tasks usually follow:

• File your final Florida sales tax return and other state returns and pay what is due, as section 213.758 requires of an owner who transfers a business, then close those accounts with the Department of Revenue.
• Work with your CPA on final payroll filings and on reporting the sale, including the purchase price allocation.
• In an asset sale, decide with your attorney and CPA whether and when to dissolve the old company.
• Cancel insurance, utilities, and services that did not transfer, once the buyer has its own in place.
• Start the transition work you agreed to, and keep a full set of closing documents.

My guide to transferring a business to a new owner in Florida covers the licenses and registrations that change hands.

Frequently asked questions

How long does closing day take?

The signing itself is usually the quick part, because the documents are negotiated and reviewed ahead of time. Most of the waiting is for the buyer’s funds to arrive and for the closing agent to confirm the money has moved. When financing is approved and documents are agreed in advance, closing can often wrap up in a single day.

Do I have to attend the closing in person?

Often not. Many closings are handled with documents signed in advance, sometimes before a notary, and funds sent by wire. Your attorney and the closing agent will tell you which documents need an original signature or notarization.

What can delay a closing?

Common causes are a missing landlord consent, a lender condition that has not been met, a payoff letter that has not arrived, a lien that turns up late, or a license transfer still pending. Most of these can be avoided by starting on them as soon as the purchase agreement is signed.

I am with you to the finish line

A big part of my job is making sure closing day goes off without a hitch, coordinating the moving parts so you can walk away confident and paid. If you are thinking about selling and want to understand the whole process from first call to closing, let’s talk. Call me at (904) 789-1276 (Truforte Business Group) or reach out here.

• Category: Business Broker Tips, Selling a Business