Signing Date

The signing date is the date on which all parties execute the definitive purchase agreement — the document that creates binding legal obligations to complete the transaction subject to specified conditions. The signing date is distinct from the closing date: signing creates the obligation to close; closing transfers ownership and consideration. In simple transactions with minimal regulatory requirements, signing and closing may happen simultaneously (sign and close). In larger or more complex deals, there is often a gap between signing and closing that can range from a few days to many months.

The signing date matters for several important legal, financial, and operational reasons. Representations and warranties are typically made as of the signing date (and sometimes re-made at closing). The purchase price adjustment period — the baseline for closing working capital, debt, and cash adjustments — is often measured as of signing or the last fiscal period before signing. Pre-closing covenants (restrictions on how the target can operate between signing and closing) take effect at signing.

In SMB deals, a simultaneous sign-and-close (same day) is common for asset purchases and simple stock sales where: due diligence is complete, no third-party approvals are pending, financing is committed, and no Hart-Scott-Rodino filing is required. The parties negotiate the purchase agreement, conduct diligence, and only sign when ready to close immediately.

A sign-then-close structure introduces risk for both parties. The seller is bound to operate under restrictive covenants and cannot market the business to other buyers. The buyer has committed to pay a breakup fee if they walk away, but has not yet deployed capital. Bridging this gap with a reverse breakup fee (buyer pays if they fail to close) and a seller's right to specific performance ensures both parties are protected during the interval.