VC & PE Glossary
What Is Signing vs Closing?
Updated
Definition
Signing vs closing distinguishes executing deal documents from completing the transaction — cash and stock transfer, filings, and regulatory steps often happen at closing, not at signing.
Useful for: Founders, Investors
Signing vs closing separates commitment on paper from completion of the transaction — a gap that matters for cash, cap table, and press timing.
How it works
At signing, parties execute definitive agreements. Obligations begin — exclusivity ends, break fees may activate, covenants govern interim operations. At closing, conditions precedent must be satisfied: board and stockholder approvals, regulatory clearance, no material adverse effect, third-party consents, and payment of consideration.
Venture rounds often close within days of signing if diligence is done. Cross-border or regulated M&A can leave months between signed announcement and closed acquisition.
Failure to close returns parties to pre-deal status unless damages or fees apply — signed is not guaranteed done.
Why it matters
- Founders: Plan runway to closing wire date. Interim covenants may restrict fundraising or major hires between signing and close.
- Investors: Fund cash flows and ownership register on close. LP reporting uses closing dates for realizations.
Common mistake
Treating a signed term sheet as closed equity — until stock purchase agreements sign and close, terms can still change or fall apart.
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Common questions
Short answers for founders, LPs, and operators