Closing the deal



Arrows icon
A happy business owner after a successful business sale
It's a done deal!

You need to have your negotiating hat on, and be confident that all your diligent preparatory work in reaching this stage makes your business worth the price you’re asking.

There’s plenty of psychology and a few key techniques involved in successful negotiations.

ExitAdviser gives you tips on how to stay one step ahead of prospective buyers. more..

Your objective is to come up with a preferred buyer that’s prepared to meet your asking price. At this point you’ll ask them to sign a Letter of Intent, so that the Due Diligence process can start. Due Diligence is the crucial point in the selling process. It’s in everyone's interest for it to go smoothly.

The shape of final negotiations will depend on the Due Diligence findings. It’s here that either party can walk away from the deal if it doesn't suit. Each will have a "bottom line" in mind. You’ll need to keep a clear head and be prepared to stand your ground, providing that you’ve the facts to back up your position.

The Business Sale Agreement is the important document for sale closure. The initial signature, following checks during Due Diligence, confirms the buyer’s acceptance of the facts as previously presented, particularly in the Sale Memorandum.

Final sign-off will depend on a successful transition phase that ensures business as usual. In particular, the buyer will want to ensure that key staff stay in the business and remain motivated. Customer, supplier and partner communication and perceptions will also need to be carefully managed.

Whether you can immediately "ride off into the sunset" will depend on the final deal that's struck. It’s not uncommon for owners to be asked to stay on in some capacity for an agreed period of time before final payment is received.


There’s an important link between preparing draft legal documents, particularly the Letter of Intent signed before Due Diligence plus the subsequent Business Sale Agreement, and any previous information you have supplied to the buyer. It pays to have been truthful with all prospective buyers throughout the process because there are likely to be consequences if you’re not.

Due Diligence is the buyer’s way of checking the facts. Any significant discrepancies found will impact badly on your credibility, and could sink the deal entirely, putting you back to square one.

However it doesn’t just end with the business sale closure. Your signature on the legal documents ties you to the facts as presented therein, even after the hand-over is complete. If something subsequently goes wrong, and it’s proven by the new owner that you’d prior knowledge, or key facts were distorted, there’s likely to be legal redress against you.

You’ll probably have to sign a Non-Compete Agreement that prevents you from setting up a new rival to the sold business for an agreed period of time. The previously signed Non-Disclosure Agreement (NDA) must also be diligently honored by you until the document’s expiry date.


Actions to take:

Get started with your own actions, sign-up

Expected outcome

Legal papers prepared.


Learn more


There’s likely to be a jockeying for position, with prospective buyers seeking to learn as much detail as they can about your business. You, by contrast, will want to withhold commercially sensitive information until they’ve made a commitment to move forward with the sale in principle, by signing a Letter of Intent to trigger the Due Diligence process.

Have a plan for information disclosure. A well-prepared Sale Memorandum puts you in control by providing a focal point for discussions, the inevitable follow-up questions, and any subsequent negotiations.

If you plan to send the Sale Memorandum to prospects before an initial meeting make sure they first return a signed copy of a Non-Disclosure Agreement (NDA). Assigning a unique number to each Sale Memorandum copy, printed in the footer of every page, will help demonstrate that you take the issue of confidentiality seriously.


Actions to take:

Get started with your own actions, sign-up

Expected outcome

Select your preferred buyer, and receive their signed Letter of Intent.


Learn more


This is where it gets detailed from the buyer’s point of view. If all the finances and documentation are in order, and there are no nasty surprises uncovered, then the deal is likely to go through, subject to final negotiations.

It’s here that you’ll appreciate the importance of being truthful with the prospective buyer early on in the process. The sensible assumption to make is that the buyer will use experts to do the Due Diligence, and that they’ll find what they’re looking for!

The buyer may choose to abort the deal at any time during Due Diligence if they discover something seriously untoward. Alternatively, the buyer may uncover specific concerns or risks meaning that they’ll only consider going ahead if the asking price is reduced, or they insist that the terms of the sale are altered in their favor. So it’s back to the negotiating table again.


Actions to take:

Get started with your own actions, sign-up

Expected outcome

Due Diligence completed.


Learn more


The buyer will want a satisfactory transition phase to their new ownership before the final deal is signed-off. This is because the buyer’s overarching concern will be to maintain "business as usual" as, without this continuity, their expected income and any plans for growth will be threatened, or curtailed. Should key staff leave the business there’s likely to be an immediate dip in performance that’ll eventually impact profit.

This is why it’s common for buyers to ask previous owners to stay in the business for a while before receiving their final payment, to reduce the buyer’s risk. The "boot is on the other foot" when part of the payment for the business is in the form of a loan from the seller (i.e. seller financing) to the buyer, secured on continuing business success. In this circumstance you’ll want to watch over the business until you get paid.


Actions to take:

Get started with your own actions, sign-up

Expected outcome

Deal closed.


Learn more