An M&A process at a glance (V): Signing and closing in an acquisition: what happens after signing?

A successful M&A process (a merger or acquisition of one or more companies) requires more than just agreement on the price. In this blog series, we discuss step by step the key legal phases of an acquisition: from the letter of intent and due diligence to warranties, indemnities, financing, the purchase agreement, and the period after closing. We share practical insights from our daily practice, aimed at entrepreneurs, investors, and advisors who want to keep control over the acquisition process. In this fifth and final episode, we delve into the concluding part of an M&A process, namely signing & closing.

For many entrepreneurs, signing the purchase agreement feels like the moment when the deal is finalized. In reality, it might only be an intermediate step. In certain transactions, signing and closing are separated, and that interim phase, plus the period after closing, often proves crucial for the ultimate success of the acquisition. A good purchase agreement is important, but without a controlled closing process and clear agreements for the period thereafter, friction and risks can still arise.

Signing is not the same as closing

Signing is the moment when the parties sign the purchase agreement. Closing is the moment when the transaction is actually executed and ownership of the shares is transferred. If there are still conditions that need to be fulfilled, there may be a delay. Consider financing that still needs to be arranged, approval from competition authorities, internal decisions, advisory or approval rights of the works council, or consent from contracting parties.

This interim phase requires clear management. As long as closing has not yet taken place, the buyer is not yet the owner, but often has a substantial interest in preserving value and continuity of the business.

Conduct of business: what is allowed during the interim period?

For this reason, the purchase agreement often contains conduct of business provisions. These specify how the business must be managed between signing and closing. The seller usually has to continue operating the business in the ordinary course and may only make certain decisions with the buyer's consent.

That sounds simple, but it can lead to disputes in practice. What still counts as normal business operations? Is a significant investment allowed? Can a contract be terminated or extended? And how should one act if market conditions suddenly change? The more concrete these agreements are formulated, the lower the chance of conflict.

Integration planning is wise, but has limits

Buyers often want to think about integration even before closing. This makes sense and is necessary in many cases. However, this must be approached with caution. Especially when competition approval or other regulatory approvals are needed, a buyer should not exercise factual control or direct the commercial behavior of the target too early.

Planning ahead is often allowed, but executing prematurely is not. Therefore, especially in larger or regulated transactions, it is important to carefully structure the flow of information and decision-making during the signing-closing phase.

After closing, the operational reality begins

After closing, the focus shifts from transaction to execution. For strategic buyers, it often involves the integration of systems, personnel, customers, governance, and reporting structures. For investors, the focus may be more on management, financing, growth, and preparation for the next step. In both cases, the legal deal is only truly successful if the business also lands operationally well.

Post-closing disputes occur frequently

Even after closing, various disputes can still arise. Consider disputes over warranty claims, the purchase price based on completion accounts, withdrawals from the business in a locked box mechanism, earn-out calculations, tax indemnities, or the question of whether certain risks were sufficiently disclosed in advance. This is why reporting obligations, claim deadlines, and procedural agreements in the SPA are so important. They not only determine whether a claim has a substantive chance of success, but also whether that claim can be formally established.

Additionally, governance after closing deserves attention, especially if a seller remains as a director, manager, or minority shareholder. In such situations, transaction agreements and collaboration in daily practice can quickly overlap. Clear agreements about roles, information provision, and decision-making help prevent that.

Signing is therefore not the endpoint, but a transition moment in the acquisition process. The best transactions are not only well-negotiated but also practically executable in the period thereafter. We would be happy to think along with you and provide you with advice.