Signing feels like the finish line. In most deals it isn’t: 57% of deals sign first and close later, sometimes weeks later and sometimes months. That gap is where covenant breaches, regulatory holds and deal fatigue strike. The deal is signed, but it can still die.
When the buyer can walk
The material adverse effect definition and the bring-down provisions decide whether the buyer can walk away during that window. They are some of the most heavily negotiated paragraphs in the agreement.
The MAE standard: The general clause usually refers to a material adverse effect on the business, financial condition or results of operations. Delaware courts, in cases like IBP v. Tyson and Akorn, have read materiality as something durationally significant, not a bad quarter. The bar is high and buyers rarely win MAE litigation, but the threat alone reshapes the negotiation. 96% of 2025 deals used forward-looking language.
Carve-outs: Sellers win here. 96% of 2025 MAE definitions included carve-outs: economic conditions, war or terrorism, changes in law, industry conditions, accounting changes, market downturns, pandemics, actions the agreement requires and the announcement of the deal itself. Each carve-out shifts a category of risk from seller to buyer.
Disproportionate impact: Buyers claw most of that back. They keep the carve-outs except to the extent the target is hit disproportionately compared with its peers. 97% of 2025 carve-out sets included at least one such qualifier; it’s the buyer’s main safety net and usually where the MAE negotiation actually centers.
The MAE is rarely the easiest exit for a buyer. A failed bring-down of reps at closing is usually an easier path, along with covenant breaches, financing failure (especially in private equity deals) and regulatory denial. Stress-test all of them.
Don’t run the company like it’s already sold
The window is governed by an operating covenant package most founders never reread after signing, and by a bring-down test many don’t know exists.
Operating covenants: A hiring spree, a capital expenditure or a contract termination between signing and closing can hand the buyer a walk right. Read the covenant exhibit and live by it.
Eager employees: Your team wants to please its new employer, but you’re still pre-closing and the deal can still die. Hold the line on confidentiality and operating discipline.
Communications: Centralize external messaging, with one spokesperson and one channel for buyer questions. One wrong message in the wrong Slack channel becomes a diligence finding or a price adjustment.
Gun-jumping: If the buyer requires approval for ordinary-course spending before closing, the FTC or DOJ can treat that as the buyer taking control before HSR clearance. Fines and the risk of a deal challenge follow.
The bring-down is now standard market practice. 71% of 2025 deals required reps to be accurate at both signing and closing, and 95% of materiality-qualified deals included a materiality scrape at closing. Keep your reps clean all the way to the wire.
The signatures the buyer doesn’t sign
Operating covenants govern what you do. Consents govern what other people do, and that’s where most deals actually get stuck between signing and closing.
Landlords: Slow and fee-extracting, and they use lease consents as renegotiation leverage. A lease may say consent can’t be unreasonably withheld, but unreasonableness is something you litigate, not something you close around.
Key customers: A customer with change-of-control rights has deal leverage. Some demand price concessions, term extensions or better warranties as the price of consent, and buyers expect it.
Software licenses: These get missed in diligence all the time: per-seat licenses that can’t be transferred, SaaS contracts with no-assignment clauses and open-source obligations triggered by a structural change. Run the IT contract review alongside the legal review.
Material contracts: Pull the change-of-control list at the LOI and start chasing signatures the day you sign.
There are workarounds. In a reverse triangular merger the target survives as the contracting party, so anti-assignment provisions are generally not triggered, though change-of-control clauses still are. Notice-in-lieu-of-consent provisions and silence-as-consent constructions are other options, and each has limits and litigation risk.
A deal can be on time on every other dimension and still miss closing because of one landlord or one customer. Start the consent chase at the LOI.
Ahmed Hasan is the founder and CEO of Venture Bridge Law, a corporate and M&A boutique. This article is general information, not legal advice.