Completion (closing)

Completion, often called closing in French practice, is when the sale takes effect: the day the conditions precedent are met, the price is paid and ownership of the asset or shares passes to the buyer. It follows the signing of the sale and purchase agreement and performs its undertakings. When nothing remains outstanding, signing and completion can take place on the same day.

In a transaction

Between signing and completion, the parties satisfy the conditions precedent: the buyer’s financing, landlord or franchisor consent, bank approvals, permits. The vendor keeps running the hotel within the limits set by the agreement and takes no major decision without the buyer’s consent.

On completion day, typically:

• the price is paid, with part held in escrow where agreed
• the shares are transferred, or the notarised deed is signed
• in a share sale, changes of directors are recorded
• contracts, keys, documents and access rights are handed over
• the security for the warranty and indemnity cover is put in place

In the hotel sector

A hotel does not close to change hands. Completion is therefore prepared with the operating team: cut-off accounts, stock count, treatment of bookings and deposits, transfer of employment contracts, notice to suppliers and distribution platforms. On the sale of a business, or fonds de commerce, the price is usually held in escrow while creditors may lodge objections.

Not to be confused with

• Signing, which is the parties’ commitment, whereas completion is its performance.
• A preliminary agreement for the sale of the property: here, completion is the signing of the notarised deed that confirms it.

The final stages, from preliminary agreement to deed, are set out in our sale process.