Closing Conditions & Consents in a Business Purchase
Closing conditions are the buyer’s last off-ramps — missing consents or a weak MAE clause can force a buyer to close into a problem.
Last reviewed: May 26, 2026 by the BizLeaseCheck Editorial Team
General information, not legal advice.
Overview
Conditions to closing are the things that must be true (or done) before each party is required to close. They are the buyer’s last opportunity to walk if something material has gone wrong or a required approval was not obtained.
The most important are required consents, regulatory/antitrust approval, key-employee retention, and the no-material-adverse-effect condition.
Topics to check
Asset deals usually need consents to assign key contracts, leases, licenses, and permits. A buyer wants the material consents to be conditions to closing; a seller wants the deal to close even if some consents are outstanding, leaving the buyer to chase them afterward.
Identify the must-have consents (the lease, top customers, key licenses) and make those conditions, not post-closing risks.
Deals over the Hart-Scott-Rodino size thresholds require a premerger notification filing to the FTC and DOJ and a waiting period before closing. Smaller deals usually fall below the thresholds, but industry-specific approvals (licensing, change-of-control) can still apply.
Confirm who files, who pays the fee, and how the parties cooperate on any regulatory condition.
FTC — Premerger Notification (HSR) ProgramA buyer often conditions closing on the retention of key employees and on the absence of a "material adverse effect" (MAE/MAC) on the business since signing. The MAE definition — and its carve-outs (industry conditions, the economy, the deal itself) — determines how easily a buyer can walk.
A narrow MAE with broad carve-outs makes it very hard for a buyer to refuse to close; a financing condition (or its absence) similarly allocates deal-certainty risk.
Key takeaways
- Make the must-have consents (lease, key customers, licenses) conditions to closing.
- Larger deals require an HSR filing and a waiting period before closing.
- A key-employee retention condition protects the value the buyer is paying for.
- The MAE definition and its carve-outs decide how easily a buyer can walk.
- Note whether there is a financing condition — it allocates deal-certainty risk.
Official resources
Legal-review notes
Guide confidence marker: Medium confidence.
- HSR thresholds and regulatory requirements change; confirm current rules and filing obligations with counsel.
- MAE and consent provisions are negotiated and deal-specific.
Frequently asked questions
What is an HSR filing?
A premerger notification to the FTC and DOJ required for transactions above the Hart-Scott-Rodino size thresholds, followed by a waiting period before the deal can close. It is an antitrust review; smaller deals usually fall below the thresholds.
What is a material adverse effect (MAE) condition?
A closing condition that the business has not suffered a material adverse change since signing. Its definition and carve-outs (for industry, economic, and deal-related effects) determine how hard it is for a buyer to refuse to close.
What happens if a required consent is not obtained?
It depends on the contract. If the consent is a condition to closing, the buyer can decline to close; if not, the buyer may have to close and pursue the consent afterward at its own risk. Make the critical consents conditions.