---
title: "What Is Conditions Precedent?"
term: "Conditions Precedent"
description: "Conditions precedent are the collective requirements—all of which must be met or waived—before parties are legally required to complete a financing, acquisition, or similar transaction."
date: 2026-07-25T00:00:00.000Z
updated: 2026-07-25T00:00:00.000Z
topics: ["venture-capital"]
source: https://venturecapitaltracker.com/glossary/conditions-precedent
---

# What Is Conditions Precedent?

> Conditions precedent are the collective requirements—all of which must be met or waived—before parties are legally required to complete a financing, acquisition, or similar transaction.

**Conditions precedent** (CPs) are the bundled prerequisites that must be satisfied—or waived—before a transaction closes and obligations become binding.

## How it works

Deal documents enumerate CPs in schedules: corporate approvals, regulatory filings, accuracy of representations at closing, delivery of officer certificates, absence of injunctions, and sometimes financing contingencies for buyers. Teams maintain CP matrices assigning owner, status, and evidence file. In VC, typical CPs include filed charter amendments, executed investor agreements, updated cap table, and board resolutions. M&A adds antitrust clearance, customer consents, and employment offer letters. **Condition subsequent** differs—obligations after close. Long-stop dates and termination rights apply if CPs fail by deadline. Partial satisfaction without waiver does not compel closing.

## Why it matters

- **Founders:** Run closing like a project plan; one missing IP assignment stalls the round.
- **Investors:** CP satisfaction is the legal gate for capital deployment and ownership marks.
- **Operators:** HR and finance deliverables (offer letters, payroll setup) often hide in CP lists—coordinate early.

## Common mistake

Assuming verbal "we're good to close" means all CPs are cleared. Counsel needs documentary evidence for each line item before wires release.

## Related ideas

Condition precedent (singular), closing binder, bring-down, material adverse change, and termination right complete the closing vocabulary.

## FAQ

### What are conditions precedent in simple terms?

They are the full to-do list that must be done before money moves and the deal binds—approvals, filings, reps confirmed true, third-party OKs.

### Why do conditions precedent matter?

Miss one item and closing slips. Investors rely on the list for protection; founders need owners and dates on every line to avoid runway crises.


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Source: https://venturecapitaltracker.com/glossary/conditions-precedent