Module 6: Purchase agreement and close
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From proposal to agreement

A well-supported proposal is progress. It is not permission to take ownership.

Module Four investigated our fictional Cedar Workshop. Module Five connected the findings to a buyer's price position and proposed terms. Now follow those decisions into the purchase agreement and the steps needed to complete the deal.

Keep three states separate: supported by evidence, accepted by both sides, and ready to complete. A finding can be supported while the price is still being negotiated. An agreed price can exist while a required permission is still missing.

Start with the same Cedar review sheet. What does each finding need to become?

Carry findings into documents

Cedar's earnings review supported forty thousand dollars of the proposed consulting adjustment, not one hundred twenty thousand. That finding informs the buyer's position. It doesn't force the seller to accept a particular price.

The five point two million dollar calculation in Module Five was illustrative, not an agreed purchase price.

When terms are negotiated, the purchase agreement records what the parties commit to: what is being bought, the price and payment rules, responsibilities and requirements for completion.

Your lawyer and financial advisers connect those terms to the findings. Supporting schedules provide detail, such as which machinery is included.

A risk may need a price decision, a contractual protection, further evidence, or a decision not to proceed. A report alone does none of those things.

Next, check how the agreed economics would actually be calculated.

Separate price from closing payments

The headline price and the cash paid at closing can differ. The agreement may specify adjustments, amounts payable later, or payments conditional on future results. Keep these categories separate.

Consider a new hypothetical working-capital example. Assume the parties agree on a five hundred thousand dollar target and a dollar-for-dollar adjustment for any shortfall. Suppose working capital delivered at closing is four hundred fifty thousand dollars, measured using the agreed definitions.

That is fifty thousand below target. Under this assumed mechanism, the purchase price adjusts downward by fifty thousand dollars.

This is not another earnings adjustment, and the five-times earnings multiple does not apply. It compares an agreed closing requirement with what was delivered.

The agreement must explain which items count, how they are measured, when the calculation is finalized and how disagreements are handled. An estimated closing calculation may be checked afterward. Other deals can use different mechanisms.

Clear arithmetic matters. So does knowing when the obligations begin.

Distinguish signing from closing

Signing means executing the purchase agreement. Closing means completing the purchase under its terms. They can happen together or on separate dates.

Unlike a proposal, a signed purchase agreement can create binding obligations before ownership changes. The actual contract and applicable law determine those obligations and any rights to end the deal.

If there is a gap, the agreement may include commitments about how the business operates in the meantime. These are called covenants: promises to do, or not do, specified things.

Signing therefore creates another question: what must happen before completion?

Prove closing readiness

A closing condition is a requirement the agreement sets for the obligation to complete. Required legal approvals must also be addressed.

Cedar's premises permission remains open. The machinery is proposed as included, but the building is not. A signed agreement or a lower price does not itself give the buyer permission to operate there.

Counsel must assess the requirement, its contractual treatment and the consequences if it remains missing. Do not assume it can be waived or left until later.

Track each requirement with an accountable person, evidence, a due point and a status. For premises access, receiving a lease is not the same as confirming the required permission.

Keep funding, approvals and required documents on separate rows. One completed row does not make the whole transaction ready.

When the team has addressed the requirements, it still needs to coordinate completion.

Complete and track what continues

Closing brings the agreed exchange together: final documents, authorized signatures, required deliveries and payment under the agreed arrangements. The deal team confirms completion; a buyer's checklist is not a substitute.

Some obligations can continue afterward. There may be a final price adjustment, a seller-note payment, or reporting for an earn-out.

Record the responsible person, deadline, calculation and supporting records for each applicable obligation. Check the agreement rather than guessing a standard deadline.

Keep these continuing obligations separate from requirements that must be addressed before closing. Moving an unresolved approval onto an after-list does not resolve it.

The business also needs to keep running.

Prepare the day-one handover

Plan the handover before closing, within the agreed confidentiality and access arrangements.

Cedar's owner manages customers, prepares quotes and oversees production. Each responsibility needs a named successor, agreed support and a workable start date. A proposed role is not an accepted commitment.

Check people, customer contact, premises access, systems, payroll and operating cash. The goal is continuity, not immediate reinvention.

During the first weeks, compare actual orders, delivery and cash needs with the assumptions behind the purchase. Use that evidence to prioritize improvements.

Before wrapping up, test the difference between momentum and readiness.

Check readiness and close the playbook

For a final hypothetical check, suppose the agreement is signed and the funds are prepared, but required premises permission is still missing. Is Cedar ready to close?

These facts do not establish readiness. Counsel must assess the missing permission and the available options. Neither the signature nor the money answers that question.

Across this playbook, the buyer's job has been connected: test the fit, gather evidence, investigate the business, assess the findings, negotiate terms and verify readiness.

Use the closing-and-handover worksheet to finish the record. Keep pre-closing requirements separate from post-closing responsibilities. Give each item evidence, an owner and a due point.

This is general education. Your qualified advisers assess the actual transaction. The practical habit is simple: carry each important finding forward until its decision and next action are clear.