Creating a Smooth Path from Signing to Closing
In Saudi Arabia’s growing M&A landscape, the period between signing and closing is a valuable opportunity both buyers and sellers to align, ensure business continuity and finalize a transaction on clear, well-structured terms.
Handled with a shared sense of cooperation, this stage builds confidence, strengthens relationships and protects the value of the deal.
Why the Interim Period Matters
Once an M&A agreement is signed, there is typically a short period before the deal officially closes. During this time:
- The seller continues operating the business.
- The buyer prepares for transition and ownership.
- Both parties aim to preserve value and stay aligned.
While this phase includes legal coordination, it’s primarily about ensuring transparency, consistency and trust.
At MCO, we’ve advised numerous clients through interim periods, helping buyers and sellers navigate this critical stage effectively, helping to ensure the long-term success.
Key Focus Areas Under Saudi Law
Saudi law continues to modernize to support deal-making, and interim operations can be managed smoothly by following these new laws. The following examples represent the most likely types of agreement and how to make they work for your business.
- Restrictive Covenants: Setting Boundaries for Stability
Restrictive covenants are agreements on how the business should be run before closing. For example, the seller may agree not to:
- Take on new debt
- Enter long-term contracts
- Make significant changes without buyer input
Constructive Strategy: These clauses are about protecting the deal’s value. When written clearly, they provide peace of mind that the business will remain stable and consistent.
At MCO, we help clients shape covenants that are protective and practical, balancing the need for business continuity with the buyer’s interest in stability.
- Representations & Warranties: Keeping Information Current
The seller shares important facts about the business at signing; these representations and warranties form the foundation of the deal.
Constructive Strategy: Confirming the agreed facts from signing again at closing ensures that both sides remain aligned. It’s a constructive way to maintain transparency and reinforce trust.
We help our clients ensure these clauses remain reliable and up to date, that they are legally sound and commercially relevant.
- MAC Clauses: Preparing for the Unexpected, Together
A Material Adverse Change (MAC) clause helps address major unforeseen changes like new regulations or external events that could impact the business significantly.
Constructive Strategy: When drafted thoughtfully, MAC clauses offer a shared safeguard, giving both sides a chance to respond constructively to major disruptions.
Our legal team works closely with clients to craft balanced MAC clauses that reflect the reality of the dynamic business environment without derailing the momentum of a good deal.
Business Continuity: Operating Smoothly with Clarity
The seller continues running day-to-day operations during the interim phase, but within an agreed framework.
Best Practice:
- List routine actions that don’t require extra approvals.
- Create a simple process for approvals when needed.
- Use open communication to resolve issues jointly.
With the right legal structure, businesses remain functional and protected, avoiding operational risk or overreach from either party.
At MCO, we regularly help clients draft flexible, clear operational guidelines that support business strength through closing.
Conclusion: A Well-Managed Interim Period Builds Stronger Deals
The time between signing and closing is a bridge to a deal. When both parties agree on clear terms, respect each other’s roles, and maintain open communication, it creates a smooth and confident path to closing.
At MCO, we believe that the interim period is a key opportunity to reinforce trust, preserve value and build momentum until we reach the finish line. With deep experience in Saudi M&A transactions, our team works closely with clients to ensure that every stage of the deal is strategically and thoughtfully managed.