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Berkonomics

The muted thrill of the deal closing.

Now you have worked for months to get this deal to the closing, anticipating the wire transfers to the shareholders that will come any minute.   This could change your life style and give you that much needed pause in your life you have been looking forward to.

All the documents were signed in a rolling series of emailed scanned signature pages during the past week or more, with each party signing their own set, never having to be in the same room to sign the single signature page for each agreement.  And in the end, the deal that means so much to you closes with a whisper.  You check your bank account every half hour to see if the wire has been posted.

Cashing_OutFinally it arrives and you see the balance in your account jump to a number you’ve never seen there before.  You pause for a minute to savor the victory.  And you go back to what you were doing right before that moment.  Or not.  But the closing was such a non-event that you wonder why people even call it a “closing.”

Congratulations.  You have joined an exclusive club, and have earned your membership.

[Email readers, continue here…]  It used to be thrilling to participate in a real “live” closing.  The date and time of the closing would be published for all interested parties.  The lawyers for both buyer and seller would meet the day before to go over a “trial closing” to be sure all documents were ready to sign.  And on the appointed morning, often at 10 AM, all attorneys, the investment bankers, you and your buyer’s CEO would all gather in a large conference room with documents already spread around the conference table.  After pleasantries, you and your opposite CEO would pick up your (fountain) pens and start moving around the table, signing agreements in the appointed spots until your fingers were weak from the effort.  The lawyers would follow and check, then finally all nod that the work was done.  A handshake, applause, a promise to meet the next day, and a celebration closing meal either immediately following or at a future time sealed the deal for all.

Those were the days.  The smell of the newly-copied papers, the smudges from the fountain pen ink, the tension followed by smiles all around, all contributed to the feeling that something grand was happening.

My favorite closing followed this pattern with a twist.  There must have been 25 of us that arrived for a 4:00 PM closing after the day-before trial closing by the attorneys.  We all expected to be finished and out of there for a late dinner.  At five the next morning, after an all-night session with revisions, midnight calls to the buyer’s parent CEO in New York and more, we finally signed the papers, all completely worn out from the many anxious moments and long, long night.  All the parties vowed to go home and get some sleep.  I went home, took a shower, and went to work as if a typical day, working now as CEO of a subsidiary of a parent company.  And yes, I checked the bank account every half hour for the wire transfer.  Some things do not change.

For those of you who ever experience the muted thrill of today’s electronic closing, you can give a nod to those days when the smoke-filled rooms were real and the tension palatable, when a closing was a face to face event.

  • Good insight on how an Exit goes down. While the process does create some anxiety, in the end it’s usually anti-climatic. Regardless, the rewards with a successful Exit are gratifying. Hopefully the instruction you provide increases business sophistication by Founders and Early Stage Investors so more people benefit when supporting entrepreneurship.

  • This article brings back my memory of the closing of the sale of my first company, on Thursday, March 15, 1984. I believe our closing started at 10am as you mention was common and it took much longer than I anticipated to go through the whole process. We went out for a celebratory dinner that evening and since the closing was scheduled for the Thursday, I scheduled a long weekend and took my family away for a few days. I too called the bank regularly from when it opened Friday morning until they informed me the wire was received. I think it took me over a week to realize the funds in my account were mine and they were real. I had seen large balances in the company account over the years but this balance was multiples of anything I had ever seen in the company account, so it was very difficult to accept it was our money.
    I look forward to helping many entrepreneurs enjoy this incredible feeling in their future.

  • Robert W. Price

    This was a great article Dave! I remember one software project. The controller brought me into his room and closed the door. We had about 70 engineers working around the clock and we were running on fumes. He called the bank and punched in our account number. On the speaker phone we heard something like: $2,598.00. I told him the CEO and VP and I are heading out to a meeting with some local angel investors. The three of us pitched our hearts out. It was exhausting, like after a game with double-overtime, but we did not know the score of the game. Well, the next day the CEO told me things are in the works. Later that day I went to see the controller. We called the bank and punched in our account number. This brings a smile to my face today just thinking about it, we heard something like: $1,002,598.00.

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