What Makes a Deal Actually Close?

Corporate finance is full of transactions that look convincing on paper.

The company is attractive. The investor is interested. The lender has appetite. The valuation appears workable. The structure makes sense.

And yet some of those transactions never close.

The reason is that a good opportunity and an executable transaction are not the same thing. Closing requires several elements to remain aligned at the same time: economics, information, capital, decision-making, documentation and people.

The final stage of a deal is therefore rarely about discovering one last brilliant idea. More often, it is about removing enough uncertainty for all parties to become comfortable making an irreversible decision.

That is what execution ultimately means.

There must be a transaction both sides actually want

The starting point sounds obvious, but it is frequently overlooked.

A deal can progress for months even though buyer and seller, company and investor, or borrower and lender remain fundamentally misaligned on one central issue.

Perhaps the seller expects a €60 million valuation while the buyer can justify no more than €50 million. Perhaps the company wants long-term growth capital while the investor expects an exit within three years. Perhaps the lender requires security the shareholders are ultimately unwilling to provide.

These issues should not remain hidden behind diligence and documentation.

A transaction becomes executable when the principal parties understand the core economics and are genuinely prepared to accept them.

Good advisers therefore try to identify deal-breakers early, before the process consumes significant time and cost.

Progress is valuable only if it is moving toward a transaction that both sides are actually willing to sign.

The numbers need to survive diligence

Initial interest is often based on a relatively limited information set.

Closing requires much greater confidence.

Historical financials need to reconcile. EBITDA adjustments need to withstand scrutiny. Forecast assumptions need to remain credible. Debt, working capital and cash generation need to be understood.

If every new layer of diligence materially changes the investment case, confidence deteriorates.

This does not mean diligence must reveal a perfect company. It means that the business investors eventually discover should broadly resemble the business originally presented to them.

A company that enters the process claiming €8 million of EBITDA and emerges from diligence with €5 million of sustainable earnings has not simply encountered a technical adjustment. It has changed the economics of the transaction.

The closer the initial presentation is to the underlying reality, the easier execution becomes.

Funding must be real, not theoretical

A transaction cannot close without capital.

That sounds elementary, but financing certainty is often established later than it should be.

A buyer may agree a valuation before acquisition financing is fully arranged. A company may sign a term sheet assuming a lender or co-investor will subsequently provide part of the required capital. An investor may still need internal approval before funds are genuinely committed.

The question should therefore always be:

where exactly will the money come from at closing?

For debt, that means understanding conditions to drawdown, security requirements, documentation and final approval.

For equity, it means knowing who has investment authority, whether commitments are binding and whether additional investors are required.

A credible transaction has a clearly identifiable path from commitment to cash.

Without that, everything else remains conditional.

Decision-makers need to be aligned before the end

Transactions often lose time because negotiations are conducted by people who cannot ultimately approve the result.

Management may reach agreement while shareholders remain unconvinced. An investment professional may support the transaction while the investment committee has unresolved concerns. A lender's relationship team may be positive while credit has not yet reviewed the structure.

The closer the transaction gets to closing, the more expensive these surprises become.

Good execution requires understanding the approval architecture on both sides.

Who can say yes? Who can say no? What information do they need? When will they decide?

Senior decision-makers do not need to manage every workstream, but they should be involved early enough that fundamental objections are not introduced after weeks of work.

Documentation should reflect the deal, not reopen it

Legal documentation is essential, but it works best when the major commercial issues have already been resolved.

If every draft agreement reopens valuation, financing, governance or risk allocation, the transaction is not really in documentation. It is still being negotiated at a fundamental level.

The legal documents should translate the agreed deal into enforceable obligations and deal with the risks identified through diligence.

They will inevitably generate negotiation. But there is a difference between negotiating how an agreed principle should operate and discovering that the parties never agreed on the principle at all.

The more ambiguity that remains when documentation starts, the greater the risk that legal drafting becomes the place where hidden commercial disagreements finally emerge.

Problems need owners

Every transaction develops issues.

A customer consent is missing. Updated accounts are late. A regulatory question emerges. A lender requests additional security. A warranty becomes difficult to give.

Problems are not necessarily dangerous when someone clearly owns them.

Execution weakens when an issue exists but nobody is responsible for resolving it.

A well-managed transaction therefore has identifiable owners for the principal workstreams and a clear understanding of what can block the next stage.

The adviser often acts as the point connecting those streams: management, lawyers, accountants, investors, lenders and other specialists.

The objective is not to personally solve every issue. It is to ensure that nothing critical remains unresolved because everyone assumed someone else was handling it.

Trust becomes increasingly valuable as closing approaches

Every deal contains incomplete information.

At some point, the parties must decide whether the information available is sufficient to commit capital.

That decision becomes much easier when credibility has been built throughout the process.

Management delivered information when promised. Difficult issues were disclosed rather than hidden. The investor did not repeatedly change its position. Advisers communicated problems early. Negotiations remained commercially rational.

None of these factors appears directly in a valuation model.

Together, they create trust.

And trust matters because no contract can anticipate every possible future event.

The closer a deal gets to completion, the parties are increasingly assessing not only the transaction itself, but whether they believe the people on the other side will behave predictably once the documents are signed.

Closing is the result of alignment

A transaction closes when several things become true at the same time.

The economics are acceptable. The information is sufficiently reliable. The capital is available. The decision-makers are committed. The material risks have been allocated. The documents reflect what was agreed. The remaining execution steps are manageable.

No single element is enough by itself.

A great business without realistic valuation may not close. A committed investor without funding cannot close. Perfect documents cannot rescue a transaction whose shareholders are no longer aligned.

This is why corporate finance advisory is ultimately an exercise in alignment and execution, not simply introduction or negotiation.

The adviser helps turn an opportunity into a process, and a process into a transaction that all relevant parties can actually complete.

Across this series we have looked at investability, capital structure, use of funds, valuation, preparation, management, offer selection and deal momentum.

All of those themes converge at closing.

Because the final measure of a transaction is not how attractive it looked when discussions began.

It is whether the parties were able to transform that opportunity into capital actually deployed, ownership actually transferred or financing actually funded.

That is what makes a deal real.