Post-closing deliveries: Overview, definition, and example
What are post-closing deliveries?
Post-closing deliveries refer to the actions or items that one party in a transaction (such as a business sale or merger) is required to provide after the closing of the deal. These can include the transfer of documents, assets, or other items that were agreed upon as part of the transaction but were not delivered at the time of closing. The deliveries are typically specified in the terms of the deal and happen after the official closing, ensuring that all contractual obligations are fully met.
In simpler terms, post-closing deliveries are the follow-up steps that happen after a deal is officially completed to make sure everything promised in the agreement is delivered.
Why are post-closing deliveries important?
Post-closing deliveries are important because they ensure that both parties fulfill all aspects of the deal, including those that require more time or additional steps beyond the closing itself. These deliveries help complete the transaction and ensure that any remaining obligations, such as transferring key documents, assets, or information, are properly handled.
For SMB owners, post-closing deliveries are crucial in finalizing a business transaction, like a sale or acquisition, and ensuring that all agreed-upon items are properly transferred, protecting both parties from future disputes.
Understanding post-closing deliveries through an example
Let’s say you sell your small manufacturing business to a buyer. During the closing of the sale, the buyer receives the business’s assets, like equipment and inventory. However, there are still a few items, such as confidential business documents and employee records, that need to be delivered after the closing. These items would be considered post-closing deliveries. Even though the transaction is complete, you still need to provide these documents within the time frame outlined in the contract to ensure everything is properly transferred.
In this case, the seller’s obligation to provide these documents after the closing ensures the buyer has everything needed to run the business and comply with legal requirements.
Example of a post-closing deliveries clause
Here’s an example of what a post-closing deliveries clause might look like in a contract:
“The Seller agrees to deliver all necessary documents, including employee records, intellectual property rights, and other materials related to the business, within [specify time period] following the Closing Date. The Buyer shall confirm receipt of these post-closing deliveries, and any failure to provide these documents within the agreed timeframe will result in [consequence, such as penalties or further action].”
Conclusion
Post-closing deliveries are a vital part of finalizing business transactions, ensuring that all agreed-upon items and obligations are completed after the deal is officially closed. For SMB owners, understanding and managing post-closing deliveries helps ensure that the transaction is fully executed, minimizing the risk of future disputes or issues. Whether it’s delivering documents, assets, or information, making sure these follow-up steps are carried out correctly is key to a smooth business deal.
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.