Transition

Set a meeting with the seller before closing to discuss specifics of the training and transition period. This allows you to discuss the transition process in detail to ensure a smooth, orderly turnover. Communication is paramount, and it’s critical that you both discuss expectations so there are no surprises down the road. We have heard stories in which a buyer continued to work at their job after the closing, expecting the seller to continue operating the business during the training period. Meeting with the seller can prevent confusion.

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Should I start training the buyer before closing?

Post-Closing Technical Aspects

Following are some action steps to keep in mind post-closing:

  • UCC liens must be periodically renewed: If you have financed the sale of your business and filed a UCC lien to protect your interest, then be sure to check when your UCC lien expires. They must be renewed periodically to remain active.
  • You will likely remain on the lease as a guarantor: Maintain a working relationship with the landlord even after your sale is complete. Ask to receive immediate notification from the landlord if the buyer is late on any lease payments. Receiving such notifications gives you an early intervention opportunity with the buyer and you may be able to step back into the business and assist the buyer in turning the business around if they run into trouble, such as failing to make lease payments.
  • Closing the entity to whom the note is due: The seller may close the entity, although it may make enforcing the seller financing note more difficult. When an entity closes, its assets become held in trust by the last board (or in the absence of a last board, the owners themselves), who must first apply the assets to the entity’s debts and then distribute the balance to the owners, in accordance with their ownership interest. Thus, in the process of liquidating the entity and assuming the entity has no debts, the benefit of the note would be distributed to the owner. If the owner closes the entity and later must sue to enforce the note, they would normally have to present documents to prove that the entity was properly liquidated and that they are the beneficiary of the note in accordance with state law.

Preparing Emotionally for the Closing