VC & PE Glossary
What Is Signing?
Updated
Definition
Signing is the moment parties execute transaction documents — term sheet, purchase agreement, or fund commitment — creating binding obligations subject to agreed conditions before closing.
Useful for: Founders, Investors
Signing marks execution of deal documents — the legal commitment to transact — which may still require days or weeks before closing completes.
How it works
In a venture round, parties sign stock purchase agreements, amended charter, and ancillary docs. Funds may wire at signing if conditions are minimal, or hold cash in escrow until closing. M&A often announces “signed” deals with a later closing date pending antitrust, shareholder votes, or third-party consents.
Signing without closing risk appears when buyers walk after material adverse changes or failed conditions — break-up fees may apply in larger transactions.
Term sheets may be binding on exclusivity and fees even before full docs sign. Distinction matters for press and employee communication.
Why it matters
- Founders: Do not spend cash or promise hires based on signing alone until you know closing certainty and wire timing.
- Investors: Signed-but-not-closed deals sit in pipeline reporting; LPs care about fall-through rates and condition risk.
Common mistake
Announcing “we closed our round” at signing when funds have not wired and charter amendments are not yet filed — employees and vendors may assume immediate liquidity.
Related ideas
- Signing vs Closing
- Break-up fee
- Conditions precedent in SPAs
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Common questions
Short answers for founders, LPs, and operators