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Closing a deal does not mean that the deal is completely closed. In most deals, the buyer and seller have more work to do after closing a deal. A company cannot produce an accurate balance sheet the same day of closing a deal. As a result, the closing uses an estimated balance sheet to predict how the finances will look after new ownership.
At an agreed upon post-closing date, the seller and buyer meet to make adjustments to the closing day balance sheet based upon the now fully closed books. In some cases, a buyer might pay more and in others a seller might receive less. If the buyer has to pay more at closing, it’s because he or she is purchasing more cash.
If you have further questions about the M&A transaction, consult with one of our expert brokers at George & Company.