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Part of Between signing and completion: the closing and integration details sellers miss
Closing and integration services, sorted by whether to buy the job in or keep it
Closing and integration services sorted by whether to buy the job in or keep it, with what to verify about escrow, completion accounts and integration help.
Between an agreed price and a business under new ownership sit several jobs somebody must do: chase the conditions, hold the money, prepare the completion accounts and move the payroll. Transfer the systems and settle people into a changed workplace.
Some of those jobs are worth buying in, some are not. This page sorts them by whether an outside service genuinely helps and sets out what to establish before engaging one.
What to take away
- Buy the jobs that need independence or a system you do not have. Keep the ones that need judgment about your own business.
- The one non-negotiable is that whoever prepares the completion accounts is instructed by you and answers to you.
- What each engagement obliges you to is your lawyer's reading; what it costs you is your accountant's.
The jobs, and whether to buy them in
| The job | Buy it in when | Keep it when |
|---|---|---|
| Chasing conditions and consents | The list is long or the parties are slow, and your lawyer will own it | The list is short and you can pursue your own landlord |
| Holding money in escrow | Any holdback exists; independence is the whole point | Never; a party holding the money is not an escrow |
| Preparing completion accounts | Always, by a qualified accountant instructed by you | Never; this decides money after the price is fixed |
| Payroll transfer | You have no payroll system, or staff numbers make errors likely | You already run payroll and can add people to it |
| Systems and data migration | The business runs on something you do not know | The systems are ordinary and the seller can walk you through |
| Integration planning | The purchase merges two operations | You are buying a standalone business to keep running |
| Staff communication | Never entirely | Always yours; it is the first thing the workforce learns about you |
The last row deserves emphasis. Whatever else is outsourced, the message to employees on the first day comes from the person who now owns the business.
Buy In or Keep In-House
Buy it in
- Conditions and consents
- Long list, slow
- Escrow
- Any holdback
- Completion accounts
- Always, qualified
- Payroll transfer
- No system
- Systems migration
- Unknown systems
- Integration planning
- Merging operations
- Staff communication
- Never entirely
Keep it
- Conditions and consents
- Short list
- Escrow
- Never
- Completion accounts
- Never
- Payroll transfer
- You run payroll
- Systems migration
- Ordinary systems
- Integration planning
- Standalone business
- Staff communication
- Always yours
What to verify about an escrow or holdback arrangement
Independence is the product; test it: who holds the money, under whose regulation, and in what kind of account? What instruction releases it, and who may give it? What happens if the parties disagree, and does the agreement name an independent expert or send you to court?
Escrow Independence Checks
- Who holds the money
- Under whose regulation
- What kind of account
- What instruction releases it
- Who may give instruction
- Disagreementexpert or court
- Fee and who pays it
- Automatic return date
What is the fee and who pays it, and does the balance return automatically on a date or require a further instruction?
An arrangement where one side's lawyer holds the money on undefined terms is not an escrow. The deal structures page sets out where a holdback fits; the service question is only whether the holder is genuinely neutral and the conditions are written.
What to verify about whoever prepares the completion accounts
This is the service that decides how much of the agreed price actually arrives, and buyers and sellers each need their own.
Completion Accounts Verification
- Prepared completion accounts before
- Read working capital definition
- Identify ambiguities before signing
- Illustrative calculation on recent periods
- Who reviews other side's draft
- Review period and objection process
Ask whether they have prepared completion accounts, not annual accounts alone. Ask them to read the working capital definition in the draft agreement and identify what is ambiguous before signing. Ask for an illustrative calculation against the business's recent periods, the one document that prevents most disputes.
Establish who reviews the other side's draft, within what period, and what happens if you object. The mechanism is explained on the closing and handover page.
What to verify about an integration or transition service
Ask what they will do, in named deliverables, and what they need from the seller. Ask if they have worked with a business of this size, since post-merger integration methods were built for large transactions and translate badly.
Integration Service Questions
- Named deliverables
- What they need from seller
- Worked at this business size
- Separates keep-operating from changes
- Will tell you to change nothing
Establish that their plan separates what the business needs to keep operating from changes you intend to make. The second group can wait, but the first group cannot wait at all.
Then ask the question that matters most: what they will tell you if the right answer is to change nothing for a season. A service paid to run a change program will find a change program to run.
What no service does for you
None verifies the business; diligence did that work and ends before this stage. None decides what you will do with the business, and none can hold the relationships the seller is handing over.
A transaction this size warrants an intermediary, an accountant and a lawyer. At this stage the intermediary's role is largely finished while the other two are at their busiest.
One further caution. If part of the price depends on results after completion, every change an integration service recommends can move that measurement.
Tell anyone advising you at this stage what the contingent terms are. Otherwise their advice rests on a picture missing its most important feature. Late completions that failed are collected in closing and integration examples, and each turns on a term nobody chased.
