Almost all the sale and purchase agreements (SPAs) I work on in an M&A context involve the execution of the agreements and the completion/closing of the transactions taking place on different days.

This is due to conditions precedent which have to be fulfilled before completion of the transactions.

These conditions are crucial enough that the parties involved often prefer not to complete the transactions until the conditions are met. On the other hand, they also prefer having signed agreements in place to avoid the risks associated with investing time, money and effort into fulfilling conditions for transactions which may not materialise.

The conditions precedent usually involve obtaining approvals from third parties or regulators.

However, it is entirely possible for SPAs to be executed and completed on the same day under different circumstances. For instance, if the only approvals required for the transactions are those of the directors or shareholders, these approvals can be obtained before or on the same date as execution of the SPAs.

Takeaway:

Just because most SPAs are executed and completed on different dates doesn’t mean execution of SPAs and completion on the same day is impossible. It’s feasible if there are no conditions precedent to fulfil.

Do not be constrained by the templates you have seen. Consider different approaches depending on the circumstances.

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This post first appeared on LinkedIn on 29 November 2023.