The Basics Of Closing - Where should the closing take place?

The closing should occur at a location most convenient to all parties involved. If financing is involved, this is almost always the city in which the principal lender is located—often in the offices of the lender’s attorneys. Otherwise, the closing is typically scheduled to take place at the offices of counsel to one of the parties.

The offices in which the closing takes place should offer adequate services, space, and electronic communications (scanning, emailing) together with sufficient secretarial (and notarial) staff, to complete the transaction documentation and otherwise consummate the deal. These facilities and services are typically found at transactional law firms that maintain offices for these specific purposes.

The buyer should seriously consider having the corporate closing and the financing closing in separate offices, within the same city, if possible. Having two office locations (or possibly more, if several pieces of large, complex financings are involved) serves the practical purpose of reducing the confusion and tension generated when many people are confined to the same quarters under stressful conditions. It also has tactical significance to the buyer.

The most difficult aspect of any closing is last-minute negotiation (and renegotiation) of deal points, both major and minor. Most often, it is in the buyer’s best interest to keep the seller and the various lenders physically apart from each other so that the buyer can control the flow of information that each group receives and can broker a consensus on open points of common concern to the buyer’s best advantage.

This can be particularly important in the area of intercreditor relationships. As closing approaches, lenders get increasingly nervous about the risks they are about to take, particularly in a highly leveraged deal, and seek to improve their position by getting more collateral to secure their loans or a piece of the equity, or by imposing tighter postacquisition covenants.

There is a definite me-too syndrome among lenders; that is, whatever concession one lender wins, the others will demand for themselves. The buyer has a better chance of neutralizing this syndrome if lenders are kept from talking to each other.