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Deal Closing Process – Complete Guide

Step-by-step guidance to help you structure deals, finalize agreements, and successfully close transactions end-to-end.

Asset sale: Buyer purchases selected assets (business, contracts, IP), not the company
Share sale: Buyer acquires shares and takes over the entire company
Choice depends on tax, liabilities, licenses, and deal complexity.
There is no universal answer. It depends on:
  1. Tax impact for buyer and seller
  2. Transfer of liabilities
  3. Ease of transferring licenses/contracts
  4. Negotiation dynamics
The structure is decided based on:
  1. Risk: Buyers prefer asset deals to avoid liabilities
  2. Tax efficiency: Varies for both parties
  3. Operational continuity: Share sales are smoother for running businesses
  4. Regulatory approvals and contracts
The optimal structure is typically finalized during deal structuring with advisors.
An earnout is a portion of the purchase price paid later based on performance (revenue/profit targets).
It is used to:
  1. Bridge valuation gaps
  2. Align buyer and seller expectations
  3. Reduce buyer risk
Deferred consideration: Part of the deal value paid at a later date
Seller financing: Seller allows buyer to pay over time
These structures improve deal feasibility and flexibility.
A working capital adjustment ensures the business is transferred with a normal level of working capital (cash, receivables, inventory minus payables).
  1. If actual working capital is lower than agreed, price is reduced
  2. If higher, price increases
Rollover equity: Seller retains a portion of ownership post-deal
Staggered exit: Seller exits gradually over time (partial now, remaining later)
Used when:
  1. Seller wants future upside
  2. Buyer wants continuity and reduced risk
A portion of the deal value is held by a third party for a defined period to cover:
  1. Claims
  2. Undisclosed liabilities
  3. Adjustments
Released after agreed conditions are met.
A deal where the buyer acquires the business in phases over time (e.g., 60% now, 40% later).
Used when:
  1. Performance needs validation
  2. Buyer wants to reduce upfront risk
  3. Seller wants to stay involved initially
  1. NDA (confidentiality)
  2. EOI/IOI (initial interest)
  3. LOI / Term Sheet (commercial terms)
  4. SPA (final sale agreement)
  5. SHA (post-investment governance)
An NDA (Non-Disclosure Agreement) protects confidential business information.
It is signed before sharing detailed financials or sensitive data.
An LOI/IOI is a non-binding document where a buyer:
  1. Expresses interest
  2. Indicates valuation range
  3. Outlines initial deal terms
A Letter of Intent (LOI) or Term Sheet outlines agreed commercial terms before final agreements.
Typically includes:
  1. Valuation and deal size
  2. Payment structure (cash, earnout, etc.)
  3. Ownership stake
  4. Key conditions and timelines
  5. Exclusivity clause
The SPA is the final legally binding agreement that defines:
  1. Sale terms
  2. Price and payment
  3. Representations and warranties
  4. Indemnities and obligations
The SHA governs relationships between shareholders post-deal, including:
  1. Rights and responsibilities
  2. Board control
  3. Exit terms
Representations & warranties: Seller confirms facts about the business (financials, legal status, etc.)
Indemnities: Compensation mechanism if those statements are incorrect
They protect buyers from unknown risks or misstatements.
A MAC clause protects the buyer if a significant negative event occurs before closing, such as:
  1. Major revenue loss
  2. Loss of key customer
  3. Regulatory issue
Buyer can renegotiate or exit the deal.
A clause where the seller agrees not to start or join a competing business for a defined time and geography.
This protects the buyer’s investment.
A period during which the seller agrees to negotiate only with one buyer.
  1. Starts after LOI/Term Sheet
  2. Usually lasts 30–90 days
Typical steps:
  1. Ownership transfer
  2. Integration planning
  3. Employee communication
  4. Customer communication
  5. Systems and process alignment
Common reasons:
  1. Poor integration planning
  2. Cultural mismatch
  3. Leadership exits
Mitigation:
  1. Clear integration roadmap
  2. Retention plans for key employees
  3. Strong communication strategy
PMI is the process of combining businesses after a deal.
MergerDomo helps by bringing in the right consultants to ensure smooth integration and value realization.
Often yes, for:
  1. Transition support
  2. Customer and team continuity
  3. Knowledge transfer
Duration typically ranges from 6 months to 3 years depending on the deal.
Synergy means the combined business is more valuable than separate entities.
Achieved through:
  1. Cost savings (shared operations)
  2. Revenue growth (cross-selling, new markets)
  3. Efficiency improvements
Typically 3 months to 2 years, depending on:
  1. Size of businesses
  2. Complexity of operations
  3. Integration depth
Aligning:
  1. Work culture
  2. Leadership style
  3. Incentives and communication
Poor cultural integration is a major reason deals fail.
Customers of the acquired business are informed through:
  1. Planned communication (email, calls, meetings)
  2. Clear messaging on continuity and benefits
Timing: usually post-signing or post-closing, depending on sensitivity
A structured incentive (often equity or bonus) given to key employees/management post-deal to:
  1. Retain talent
  2. Align performance with growth goals
Usually defined in the Term Sheet/SHA.
  1. Revenue growth
  2. Cost savings
  3. Customer retention
  4. Margin improvement
A detailed analysis of true, sustainable earnings of the business.
EBITDA adjusted for non-recurring or owner-specific items such as:
  1. One-time expenses/income
  2. Excess owner salary
  3. Personal or non-business costs
Buying a division or business unit from a larger company.
A small acquisition integrated into an existing business to:
  1. Expand capabilities
  2. Add customers or geography
  3. Improve efficiency
An acquisition attempt made without approval of the target’s management.
Existing management purchases the business from current owners.
An acquisition funded largely using borrowed capital (debt).
Running multiple strategic options simultaneously (sale + fundraising).
For SMEs, it:
  1. Maximizes valuation
  2. Increases negotiation leverage
  3. Reduces dependency on a single outcome
An anonymous, one-page summary used to attract buyers without revealing identity.
👉 Create your deal teaser here: Use the Deal Summary Generator (DSG)
When the seller evaluates the buyer to ensure:
  1. Financial capability
  2. Credibility
  3. Ability to close the deal
A pre-agreed payment if a party backs out of the deal under specific conditions.
A MAC (Material Adverse Change) clause is a provision in a deal agreement that protects the buyer if a significant negative event occurs in the business before closing.
Example:
  1. If a company loses its largest customer before the deal closes
  2. The buyer can renegotiate the deal price
  3. Delay the transaction
  4. Exit the deal entirely
An incentive (equity/bonus) given to key management to:
  1. Stay post-acquisition
  2. Drive performance and growth
Successful M&A depends on:
  1. Preparation and clean documentation
  2. Realistic valuation
  3. Structured deal process
  4. Strong execution
MergerDomo helps by:
  1. Identifying the right buyers/investors
  2. Structuring optimal deals
  3. Managing end-to-end execution
💡 Pro Tip: Complete your profile and enable deal alerts to get personalised recommendations.
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