Signing and completion are different stages in an acquisition process. Usually, parties will sign the transactions documents, but agree that completion will only take place if and when certain conditions are subsequently fulfilled. These conditions are known as “conditions precedent”.

Signing: “signing” refers to the point at which the various parties have finished negotiations, reached an agreement, documented that agreement, and agreed to be bound by the agreement by signing the relevant transaction documents (subject to the fulfilment of any outstanding conditions).

Completion/closing: “completion” refers to the point at which the transaction actually takes effect. This can occur at the same time as signing, or weeks (even months) after. For instance, the parties may sign the documents, but agree that the transaction will not “complete” until certain conditions – for example the receipt of regulatory clearance – have been satisfied (i.e. fulfilled). Once those additional conditions have been satisfied, completion can then take place, meaning the deal will “close”.

Conditions precedent (CPs): in an M&A context, these are conditions that must be fulfilled before the parties will be bound to perform their obligations under a contract, usually between signing and completion of a deal. Notable examples of conditions precedent in the context of a transaction include the receipt of consent (for the deal to go ahead) from a target’s existing lenders and clearance from the relevant competition authorities.

Preparing execution versions of documents

If a contract is not executed properly, it may not be binding (subject to the common law rule of estoppel). Certain types of contracts must be executed in different ways in order to properly bind the parties. The manner of execution will depend on whether the parties are individuals or companies, whether the agreement is a simple contract or deed, and the jurisdiction(s) of incorporation of the contractual parties. This will all determine the wording that needs to be used in signature blocks, as well as whether witness blocks will need to be included.

Towards the end of a deal, trainees are commonly asked to prepare “execution versions” of the deal documents, meaning final versions of those documents that are ready for the parties to sign. This involves checking that there is no missing information in each document, the format adheres to the relevant house style and the correct execution blocks are in place.

Missing information

Whilst a document is a work in progress, parties tend to include square brackets around information that is yet to be confirmed (e.g. [£1,000,000]) or around a blob used to represent the fact that information still needs to be added (e.g. [ · ]). Firms may also highlight particular information as a reminder that the information still needs to be verified or is still being negotiated. When preparing execution versions of documents, you should therefore check that there are no square brackets or blobs left that need to be deleted or replaced (you can use control+f to do this) and that there is no highlighting remaining throughout the documents.

Date

Ask your supervisor whether the date should be filled in using your word processer. If not, ensure enough space is included in a placeholder (e.g. “_____________________”) so that the date can be filled in by hand once the document has been printed.

Document numbers, version numbers and page numbers

When working on documents via a firm’s centralised document management system, those documents may have an automatically-generated number that appears at the bottom of each page (this is known as the “document number”). Such documents may also display a “version” number that updates each time the document is amended, saved and then reopened (this could appear as “/version number” at the end of the document number). In addition, documents usually include page numbers throughout. When preparing execution versions of documents, check whether you should add or remove such document numbers, version numbers or page numbers from those documents (or from those documents’ signature pages).

Retaining document numbers can help you to match-up documents to the correct signature pages, which can be especially helpful if multiple parties send you a collection of signature pages without clearly identifying the corresponding documents. However, you may be told to delete document version numbers from execution versions of documents, or at least from the signature pages.

For example, let’s assume that your main document includes a specific document version number at the bottom, you send this out to be signed, then receive back a signed signature page that also has that same document version number displayed on it. If in the interim you have had to make further amendments to the main document, the version number may update to reflect the fact that a new version has been created, meaning the document version number may no longer match the one displayed on the signature page. This could be problematic, as the conflicting numbers might suggest that the correct version of the document hasn’t been signed and thus that the signatory didn’t intend to sign the document in question.

Similarly, if you include page numbers on the signature pages and – after the signature pages have been distributed to the parties – you add another page to the main document, the page numbers on the signature pages will no longer follow the page numbering system in the main document. 

Format and presentation

Ensure that “DRAFT” or similar wording has not been left on the document’s front cover or in the header or footer. Perhaps also check whether “EXECUTION VERSION” should be added to document and whether a cover page is required.

Coordinating a signing or completion

Trainees will regularly be involved in project managing signings and completions (note that “completions” may also be referred to as “closings” in practice). Below are some practical considerations to remember when coordinating a signing or completion.

• Instructions to the client: consider whether it is appropriate to send an email in advance to the client setting out how the signing or completion process will work. You could include, for example, a list setting out all the documents that need to be executed, the formalities for execution and the parties that are required to sign each document.
• Closing checklist/completion agenda: you might need to prepare a detailed agenda in advance, setting out what needs to be done, where it must be done, who is responsible for each action and any relevant deadlines. You might also be asked to include a list of the documents that need to be delivered by completion, plus a list of the relevant signatories.
• Dry run: a “dry run” involves getting into a room with the other side’s lawyers and checking that all the documents are in order and ready to be signed. This can help to ensure that everything is ready before the clients arrive for a signing or a completion meeting.
• Meeting rooms: consider whether you need to book a meeting room in advance if your firm is hosting the signing, or multiple “break out” rooms so that the respective parties can discuss issues in private should the need arise. If so, remember to check how many people are likely to attend so that you book a big enough room!
• Signatories: ensure all the required signatories are available to sign the necessary documents on the stipulated date and (if the signing or completion isn’t taking place virtually) at the relevant location.
• Insolvency checks: you may be asked to perform a last minute insolvency check on certain companies that are involved in the transaction. To do this, you will need to call the Central Registry of Winding Up Petitions and give the names of the companies that you want to check; the operator will then inform you of the relevant companies’ statuses. Once you have carried out an insolvency search, consider documenting this in an attendance note or email.
• Funds flow: ensure you know who is supposed to receive the consideration (including their account details) and when it is due to be transferred. Be sure to take into account bank opening times – including bank holidays – when anticipating the timing of monetary transfers.

Practical tips: when preparing documents for a signing, consider using different coloured tabs to indicate where different parties should sign, as this can help you – and those parties – to keep track of what needs to be done (this is especially important if there are dozens of documents that need to be signed by a multitude of parties). Be careful if you are using “sign here” tabs to indicate where clients should sign. Clients may sign documents absent-mindedly, meaning if a tab or arrow points in the general direction of a signature block but is closer to (for instance) the witness signature line, the client may end up signing in the wrong place (this happened to me!). Finally, make sure that you have at least a basic understanding of the purpose of each document, as clients may well ask (even if just to make idle conversation).

Corporate authorisations

The parties should ensure in advance that the correct corporate authorisations are in place to permit the relevant parties to complete the transaction (these authorisations are typically included within a set of board minutes).

Corporate authorisations: this is an umbrella term that covers the various documents that will need to be signed by the parties’ directors (and often, shareholders) to authorise each party’s entry into the transaction. Examples include board minutes and shareholders’ written resolutions, which typically involve the signatories explicitly consenting to the transaction and confirming that they have considered whether it is in the relevant party’s best interests.

When drafting corporate authorisations ahead of a signing or completion, ensure that:

• The summary of the transaction is accurate;
• The key transaction documents are listed and correctly described;
• Statements are included to document that the directors have considered their duties, concluded that the transaction will promote the success of the company and declared any interests they have in the transaction; and
• The relevant directors (and other parties if applicable) are authorised to approve amendments to and execute the documents (and any ancillary documents). A catchall provision will also usually be included to enable the directors to do anything that they deem necessary, in their sole discretion, to further the transaction.

Virtual signings / “Mercury” signings

Virtual signing: a signing involving the exchange of electronic copies of documents and signatures.

It is important to ensure that you coordinate a virtual signing/closing properly, complying with the relevant legal formalities that govern the exchange of electronic copies of documents and signatures. Failure to do so could call into question whether the documents are legally binding. Note that firms will usually have their own “house view” or internal procedures that govern the approach to take during virtual signings, including standard wording to include in a “signing email”, so be sure to check.

Practical tip: if the virtual signing involves foreign law-governed documents, or entities incorporated outside of England and Wales, ensure that you have obtained advice from local counsel (i.e. foreign jurisdiction lawyers) regarding any specific requirements in the relevant foreign jurisdictions relating to the execution of those documents.

Coordinating a virtual signing

When coordinating virtual signings, you should send the relevant signatories instructions covering: 

• Where the recipients should sign the document(s); 
• Any specific formalities that must be adhered to (e.g. having signatures witnessed); 
• The deadline for signing and returning the signed versions; and 
• Whether original copies are also required (if so, explain where these should be returned to).

Practical tips: give parties advance warning of the deadline for a virtual signing and remind them that they will need access to their emails and possibly a scanner in order to execute documents. In addition, remember that the “wet ink” (i.e. original, hand-signed) documents may also be required if there is a need to file signed original versions of the documents with a registry or other authority (e.g. the Land Registry or HMRC), so advise parties to retain – and if applicable, return to you – the originals once they have sent over electronic copies.

Deeds

Deed: a deed is a specific type of contract that must be used for certain types of arrangements, including transfers of land, the granting of powers of attorney, and transactions where consideration is not flowing between all the parties. The execution requirements for deeds are more onerous than those for simple contracts (as explained in more detail in the Signing and completion section of this chapter).

In light of the case of Mercury Tax Group and another v HMRC, when arranging virtual signings of deeds, signatories must send back a single email attaching both a copy of the full, final version of the document and (either within the main document, or as a separate attachment) the executed signature page(s). 

It is insufficient to attach only the signature pages to an email; the full, final version of the document must also be attached to the same email to evidence that the signatory intended to sign that specific version of the document. This requirement doesn’t apply to simple contracts however.

In addition, if the document to be signed is a deed and it is being witnessed (as opposed to being signed by two directors or a director and a secretary), then the witness must be physically present when the signatory signs the document, even if the signatory is electronically signing the document (e.g. using software such as DocuSign).

Release of signatures

When signatories email over their counterparts to whichever party has agreed to compile the final document (or, more likely, the relevant party’s law firm), that party will attach the various signed signature pages to the final version of the relevant document, creating one final “compiled copy” of the document. 

At this stage, the signatures are often referred to as being circulated “in escrow” or “held to order”. This means that those signatures will not be deemed to be “released” (meaning the document cannot be executed) until the parties subsequently confirm that they intend for them to be released. 

Counterpart: a separate copy of an agreement that has been executed by one or more of the parties (but not all the parties). Each counterpart constitutes an “original” and together all the various counterparts (i.e. the different copies that have been signed by different signatories) form a complete agreement.

Once everyone is happy, the party that compiled the document will date it, and circulate it to the other parties, stating that it is still “in escrow”, pending completion. Completion then occurs once each party agrees that the respective signatures can be “released”, at which point the relevant documents are executed and become legally binding. This sometimes happens on a call, although the release of signatures is often confirmed by email.