Chapter 50Closing It Out
Closing day represents the culmination of extensive negotiations, approvals, and diligent planning. At this pivotal moment, the definitive agreement, already approved by both boards and shareholders—including successful completion of the 280G analysis—is ready to be officially signed and executed. Despite its ceremonial appearance, closing day demands meticulous preparation and careful execution to ensure everything proceeds seamlessly.
1. Critical Signatures and Documentation
Your lawyers will manage this process for you on closing day. Several key documents require signatures and countersignatures, including:
1. Final Definitive Agreement
2. Disclosure Schedules
3. Assignment and Assumption Agreements
4. Non-Competition and Non-Solicitation Agreements
5. Employment Agreements for retained employees
6. Termination Agreements and Release Forms for departing employees
7. Bill of Sale and Transfer Documents
8. IP Assignment Agreements
9. Resignation Letters from departing board members and executives
10. Dissolution of the board of directors
2. Financial Transactions and Payments
A significant aspect of closing day is the financial settlement. By this time, the acquiring company should have already wired the agreed-upon purchase funds to the seller's designated bank account. Upon receipt, the proceeds need to be immediately distributed according to pre-agreed amounts to:
1. Shareholders
2. Outstanding creditors and vendors
3. Investment bankers and legal advisors
It's strongly recommended that you or your CFO manage this process physically at a bank branch alongside your banker to ensure accuracy, security, and timely execution. Having at least two individuals overseeing this step is essential to mitigate any risk of errors or wire fraud, which can be more prevalent with virtual transactions.
3. Asset Transfer
Certain key assets integral to the completion of the deal must also be transferred on closing day. Common examples include:
1. Source code repositories (via GitHub or other platforms)
2. App store listings and ownership transfers
3. Domain names and intellectual property rights
Proper documentation confirming asset transfers must be meticulously verified to prevent future disputes or liabilities.
4. Employee Transition and Communications
Closing day typically marks the last day of employment for all employees. It’s essential to serve termination documents and finalize severance agreements for those not retained. A generous severance package, along with signed release forms, is crucial to ensuring goodwill and minimizing post-transaction disputes.
This is also the appropriate moment to announce the transaction formally to the broader team, highlighting the new joint direction with the acquiring team, and you could invite key executives from the acquiring company to give a talk, but also acknowledge the work put into this process by the entire company and congratulating everyone for making it to the other side. It is a huge milestone regardless of the financial outcome. Clarity and sensitivity during these announcements are essential to maintain morale and ensure a smooth transition. Retained employees will also sign their new employment letters and should get informed individually of their new compensation packages which includes their new base salary, stock options, retention bonus and other considerations.
5. Payroll and Final Settlements
A final payroll run should be conducted to settle prorated salaries up to the closing date, including payment for unused vacation days.
6. Public Announcement and Press Release
Though not mandatory, a pre-drafted press release distributed on closing day can effectively mark the milestone publicly. This not only recognizes the collective hard work and achievements but also provides closure after the stress and intensity of negotiations and due diligence.
7. Personal Anecdote: The Pixieset Acquisition
Our deal with Pixieset closed on April 30th, 2025, a Wednesday. We had a 10am meeting with our entire team announcing the deal. Even though at this point everyone already knew that this was happening as everybody was interviewed by the acquiring company, there were still some emotions running through everyone as we shared our fond memories of first starting out, the times when we thought the company was going to run out of money, and those who we missed. My co-founder Borui and I met for lunch, anxiously checking our phones throughout the meal. Around 1 pm, the funds arrived in our account—banks close at 5 pm EST, adding urgency to the moment. Seeing the money come through was an immense relief, instantly lifting years of uncertainty and stress. I vividly recall the overwhelming realization: we did it, we actually did it. Borui headed to the office to manage a few logistical details, including signing a short-term lease, while I headed home for a well-deserved nap.
Closing day, therefore, is not just an administrative milestone—it's a deeply human moment marking the successful conclusion of one chapter and the beginning of another.