PART 3 OF 4: Deal Breakers That Arise After Signing

The problems that emerge between signing and closing, and after.

Many discussions of deal breakers focus on diligence, as though a deal that survives to signing is safe.It is not. 

A significant share of transactions break down after the definitive agreement is signed but before closing, or unravel afterward. This article addresses the deal breakers that surface late — when the parties thought the hard part was over.

Failed closing conditions

A signed agreement typically closes only if its conditions are met. Deals break when a required condition fails: a necessary consent is withheld, financing falls through, a regulatory approval does not come, or a required license or enrollment cannot be obtained in time. A condition that seemed routine at signing can become the reason a deal dies.

Material adverse changes

Between signing and closing, the practice keeps operating — and things can change. A significant loss of patients or key staff, the departure of a major referral source, a new investigation, or a sharp decline in performance can give a buyer grounds to renegotiate or walk, particularly where the agreement includes a material adverse change provision.

Financing and payment failures

The collapse of a buyer's financing is a classic late-stage deal breaker. Related problems include a lender's conditions that the buyer cannot satisfy, or, in seller-financed deals, a breakdown over the terms and security for the seller's continuing financial exposure.

Post-closing disputes

Some deals close and then come apart. Common sources of post-closing rupture include:

• Purchase price adjustments and true-ups the parties cannot agree on.

• Earn-out disputes over whether targets were met and how performance was measured.

• Indemnification claims when undisclosed problems surface after closing.

• A seller transition that does not go as promised.

Why late-stage breaks are so damaging

A deal that breaks after signing is costlier than one that never forms. The parties have spent heavily, disclosed extensively, and may have made commitments in reliance on the deal. Careful drafting of conditions, adjustment mechanisms, and remedies at the definitive-agreement stage is what limits this exposure — the protection has to be built in before the problem appears.

How West Coast Health Law Can Help

We help parties anticipate and manage late-stage risk — drafting closing conditions, adjustment mechanisms, and remedies that protect against the problems that surface between signing and closing and beyond.

West Coast Health Law offers a FREE consultation which you may schedule by clicking the button on our website.

This article is provided for general informational purposes only and does not constitute legal advice or create an attorney-client relationship. Laws change and every transaction is different; consult a qualified attorney about your specific situation.