Closed on the sale of my manufacturing business six months ago. Last week my accountant asked for the final executed purchase agreement because the buyer is disputing a working capital adjustment. I had the PDF in three places within ten minutes. It got me thinking about how many sellers treat closing as the finish line and don't keep a complete set of everything that was signed. Curious what others here have run into.
Documentation
Why keeping copies of every signed closing document is critical
Same situation but with a lease assignment two years after closing. Buyer claimed we never never delivered the landlord consent. I emailed the scanned copy with the signature page and that was the end of it. Took five minutes.
What counts as every document though. My closing binder had maybe forty pages but the escrow officer mentioned there were side letters that never made it into the binder. i only found out because the buyer's counsel referenced one later.
The side letters are the whole problem. If it was signed anywhere in the deal, get a copy. Especially anything mofifying the purchase agreement, any earnout schedule, and any personal guarantee that got released. Those come back to haunt people.
Agreed on the side letters. In my case the working capital schedule was an exhibit that got revised twice after signing. I only had the final version because the attorney sent me a closing set after the fact. If I had relied on what I printed at the table I would have been missing the revision.
How long are people keeping these? My attorney said seven years for tax purposes but the indemnity provisions in my deal run longer than that.
Indefinitely if there are earnouts or deferred payments. I still have a full closing set from a sale in 2016 because the buyer had a two year earnout and then a three year tail on reps and warranties. It is one folder on a drive. Costs nothing to keep.
The other issue is who has the originals. I kept copies but the escrow company dissolved a year later. Nobody could produce the original signature pages when a lender asked. Scan everything before you walk out of the closing room is my advice now.
And keep it somewhere that isn't tied to the business email you're about to lose access to. I've seen sellers scrambling because the only copies were in the company's shared drive and IT shut it down the week after closing.