Averting a crisis is exciting! Negotiating a deal is exciting! Closing a deal is exciting! Moving on to the next deal is exciting! Making a follow-up “To-Do List” and completing the tasks on that list is not. However, I see time and again situations where important post-closing items fall through the cracks and ultimately end up costing parties time and money – often resulting in lost opportunities, disappointed expectations and a failure to obtain the full benefit of the bargain that was struck.
So what are some of the most common examples of poor follow-through? You might be surprised – they include failure to:
• actually sign the transaction documents, or to obtain all necessary signatures from parties such as, e.g., guarantors;
• obtain final executed documents and keep them where you can locate them in the future;
• attach critical exhibits – like legal descriptions, product schedules, minimum purchase quotas, etc.;
• obtain bonds, proof of insurance or important loss payee designations;
• docket important future dates, like delivery of tax returns, financial statements, renewal/termination dates, etc.;
• properly file (or to promptly file) documents such as mortgages, UCC financing statements, patent applications, etc.;
• follow the terms of the transaction documents, or to execute an amendment when the deal changes;
• require the return of confidential information and business assets such as copies of agreements, customer lists, product specifications, laptops, cell phones, etc. upon the termination of a business relationship; and
• obtain required approvals from lenders, shareholders, directors, etc.
The above items are merely examples of failures to follow through that can have a devastating impact on a deal or company. My advice – don’t be the company that fails to follow through by tying up the loose ends of your deals. Make post-closing checklists; prepare executive summaries of important agreements; docket dates; keep originals (or at least copies) of important agreements where you can locate them; and most importantly, take the necessary steps to realize and protect the value of your deals!