Go for the "Fizzle"
By: Stewart Lapayowker
June 30, 2010
What should you look for in a good, successful, closing? Strangely, a fizzle. That’s right, a fizzle.
Those familiar with aircraft transactions know that the consummation of an aircraft purchase or sale occurs typically on a conference call with all relevant parties on the call with an escrow agent, a title company or local FAA counsel in Oklahoma City. There are typically several weeks of work that have gone into the offer to purchase, the purchase agreement, the pre-purchase inspection, the buyer’s structuring of its operations to comply with FAA regulations, minimize state tax implications and maximize federal tax benefits, the preparation of conveyance documents, dry leases (if applicable) and other operational matters.
So, what should happen on the closing call in order for the closing to be considered successful? Nothing. Absolutely nothing. If the parties have open issues to resolve, the closing call is not the place for it. The buyer’s and seller’s representatives should poll their respective sides to confirm that there are no open issues. If there are, just don’t schedule the call. The closing call has so many different people on the line, with sometimes differing agendas (and egos), that a small issue can become a war of wills.
Have a checklist, run through it several times before scheduling the closing call, and be sure that your counterpart is on the same page. Only then should one schedule the closing call.
So what happens if issues are raised on the call, interrupting the flow? Simple. Adjourn the call or give the relevant parties the time to speak offline and resolve the issue. Avoid doing it on the closing call unless you are absolutely sure of how the other party will react.
If the only voice you hear on the call is that of the escrow agent or local FAA counsel running through the documents in escrow, a description of the documents in escrow and confirmation that funds are sufficient, and nothing else happens on the call other than the sound of the grunting of the parties approving release of documents and funds, then in my view you have just experienced a successful closing.
Go for the fizzle! Success will be evident when everyone’s patting themselves on the back for the great job they’ve done (after the FAA filing time is available).