The Newcomer’s Guide to M&A, Part 5
Navigating Closing Documents & Legal Pitfalls
“In M&A, what’s written matters more than what was said.”
— Every lawyer ever
By the time you reach the closing stage of an acquisition, it’s easy to think the hard part is over. You found the business. You built trust. You aligned on values. Everyone’s nodding. Great!
But then… the legal docs drop.
And suddenly, your nice clean LOI turns into 80+ pages of legalese with terms like indemnification caps, disclosure schedules, and post-close obligations. Not exactly light reading.
So let’s break it down.
What’s Actually in These Documents?
The closing package will vary deal-to-deal, but these are the usual suspects you’ll encounter at this stage:
Asset Purchase Agreement (APA) or Stock Purchase Agreement (SPA)
→ This is the backbone. It outlines exactly what you’re buying and how—including the financial, operational, and sometimes mission-critical elements of the deal.Disclosure Schedules
→ These are attachments where the seller lays out exceptions to the reps they’ve made. (Think: “We said there were no lawsuits, except that pending wage claim from 2021.”)Bill of Sale, IP Assignment, Employment Agreements, Non-Competes
→ These supporting documents transfer key rights and relationships, and often include restrictions to protect the buyer post-close.Closing Certificate and Bring-Down Certificate
→ These final confirmations are typically signed at closing. The closing certificate affirms that all deal conditions have been satisfied (usually by the seller), while the bring-down certificate reaffirms that reps and warranties remain true as of closing—often signed by both parties. Think of them as the deal’s last “all clear” signals before money moves.
What Should You Watch Out For?
Here’s where first-time buyers can get burned:
Overly broad or vague reps & warranties
If you’re not careful, you could be liable for skeletons in the closet from years before you arrived. Push for clear, specific language, and make sure exceptions are properly disclosed.Indemnification landmines
Pay close attention to:Survival period (how long reps remain enforceable)
Caps (maximum the seller has to pay if something goes wrong)
Baskets (minimum threshold of damages before a claim can be made)
These terms are negotiable, and they directly affect your risk post-close.Earnouts with fuzzy math
If part of your payment depends on future performance, make sure the targets are clearly defined, measurable, and fair—or you’ll be arguing about the scoreboard down the road.Legal fees that quietly balloon
This is where the real sticker shock can happen. Whether you're working with a big firm or a solo practitioner, ask questions and make sure you're getting actual strategic value, not just markup for boilerplate.
A Real-World Lesson
When Unilever acquired B Corp-certified Seventh Generation in 2016, both sides had to wrestle with more than just financials. Seventh Generation’s leadership was deeply concerned about whether their mission—planet-friendly products and progressive corporate values—would survive under a multinational giant.
So instead of relying solely on verbal assurances, they worked legal protections into the deal:
Language around preserving the brand’s autonomy
Commitments to continue sustainable sourcing practices
And a governance structure that ensured Seventh Generation’s original team still had influence post-close
They even negotiated the ability to remain a Public Benefit Corporation—a legal designation that helped lock in their values.
Moral of the story: If mission matters, write it into the deal. Don’t assume your buyer—or your seller—will “just get it.”
Where First-Time Buyers Get Stuck
You don’t need to become a legal expert overnight, but you do need to stay alert. This is the part of the process where many buyers get overwhelmed or freeze up—either from document fatigue, imposter syndrome, or thinking their lawyer is handling everything behind the scenes.
And while we always recommend working with a deal-savvy attorney or advisor—especially one who understands small business and values-aligned transactions—it’s your call. Just know this: if something doesn’t align—financially or ethically—it’s worth flagging. The best advisors won’t just redline. They’ll help you understand what you’re signing and why it matters.
Your Legal Checklist
Before you close, ask yourself:
Do I understand what I’m actually buying?
Are the seller’s reps backed by real disclosures?
Is my downside protected (via escrows, indemnities, or rep & warranty insurance)?
Are the post-close obligations clear and doable?
Am I getting what I negotiated or did something sneak in late?
Final Thought
You don’t have to memorize every clause or speak fluent legalese. But you do need to stay engaged. If you're working with legal support (and we suggest you do), make sure they speak your language—no ivory tower advice, just practical guidance aligned with your goals.
Because legal docs don’t just close the deal. They shape what ownership feels like on Day One, and whether the mission survives to Day Two.
Up Next:
Post 6: Integration 101 — Capturing Value from Day One
Launching Wednesday, July 30
This is the final post in our series, and we’re ending strong. We’ll walk through what happens after the deal closes: how to hit the ground running, avoid common integration missteps, and actually capture the value you just worked so hard to acquire.
Friendly heads-up: We’re sharing insights based on our experience, but this post isn’t legal advice. Every deal has its quirks, and closing docs can get dense. When in doubt, bring in a good attorney—
someone who knows M&A and can help you navigate the fine print with confidence. It’s worth it.