Financial Poise

Closing Conditions

  • October 7, 2021
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As explained by Lexology, “In the event there is a period of time between the signing of a definitive acquisition agreement and the closing of the acquisition, the parties will have to agree on a set of conditions that must be satisfied (or waived) before the acquisition may be closed. These conditions are generally referred to as “closing conditions.”

The failure to satisfy a closing condition gives the other party a right to refuse to close the acquisition but does not make the failing party liable to the other party, unless such failure is the result of, or the cause of, a separate breach of the acquisition agreement. In addition, because of the period of time between signing and closing, events may occur that may result in a party’s desire to terminate the acquisition agreement prior to closing. Accordingly, the parties often negotiate provisions granting the right to terminate the acquisition agreement upon mutual agreement or upon the occurrence of certain specified events.