Post-closing access: Overview, definition, and example
What is post-closing access?
Post-closing access refers to the rights or permissions granted to one party to access certain information, property, or assets after the closing of a transaction or deal. It is typically included in agreements involving the sale of a business, property, or assets, where the buyer or seller may need to access certain documents, records, or facilities for a specified period after the transaction has been completed.
For example, a buyer might have post-closing access to the seller’s financial records for a period after the sale to ensure that all representations and warranties made during the transaction are accurate.
Why is post-closing access important?
Post-closing access is important because it ensures that both parties have the ability to address any issues that may arise after the transaction is completed. It allows for the resolution of any outstanding matters or clarifications, such as reviewing financials, ensuring compliance with agreements, or managing transitional activities. This access helps mitigate risk by allowing the buyer to confirm information or resolve discrepancies discovered after the deal has closed.
For sellers, post-closing access clauses can ensure that they are not held responsible for unresolved matters that come to light after the transaction is completed, while still providing necessary transparency to the buyer.
Understanding post-closing access through an example
Imagine a company selling its business to a buyer. The buyer agrees to the sale, but after closing, they realize they need to review certain financial documents and records to ensure the seller’s representations about the company’s earnings were accurate. The agreement includes a post-closing access clause that allows the buyer access to the seller’s accounting books for 90 days after the closing to confirm the information.
In another example, when a commercial property is sold, the buyer might need post-closing access to the property’s maintenance records or tenant contracts to ensure the property is managed properly. The seller agrees to provide access to these records for a set period after the sale.
An example of a post-closing access clause
Here’s how a post-closing access clause might look in a contract:
“The Buyer shall have access to the Seller’s financial records, documents, and other relevant information for a period of [number] days following the Closing Date to verify the accuracy of the Seller’s representations and warranties made during the transaction. The Seller agrees to provide such access during normal business hours and cooperate in any necessary follow-up actions.”
Conclusion
Post-closing access is a crucial element in ensuring both parties can resolve any outstanding issues or confirm the accuracy of information after the transaction has been completed. It provides transparency and allows the buyer to verify key details, while giving the seller a clear understanding of the buyer’s rights to access information after closing. Including this provision helps prevent disputes and ensures that both parties are protected in the event of unforeseen complications post-closing.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.