When it comes to commercial transactions, the closing phase is often viewed as the final sprint in a marathon of negotiations, due diligence, and legal maneuvering. However, even at this critical juncture, mistakes can still derail deals, trigger disputes, or create long-term legal and financial liabilities.

Whether you’re a seasoned business owner, a real estate investor, or corporate counsel, understanding these common closing pitfalls can help you safeguard your interests and ensure smooth execution. Here are some of the most frequent — and costly — closing issues in commercial transactions:

1. Inadequate Due Diligence
Skipping or rushing through due diligence is one of the most common closing blunders. Whether it’s an asset deal or a business acquisition, failing to identify liabilities, title defects, environmental risks, or zoning issues can lead to nasty surprises after the transaction is finalized.

Allocate enough time for thorough due diligence. Energy assets are often subject to a maze of federal, state, and local regulations. A common error is assuming all necessary approvals or permit transfers are in place at closing, only to discover post-close that key operating permits, FERC authorizations, or environmental consents were not properly addressed.

The best way to ensure that each of these regulatory hurdles and due diligence action items is properly addressed at closing is with a closing checklist. The closing checklist should expressly assign responsibility for confirming each item and be updated through every stage of the transaction to ensure a smooth closing.

2. Unclear or Incomplete Documentation and No Signature Packets
Contracts that lack clarity or omit key terms can lead to confusion or legal disputes in the future. Common issues include missing exhibits or schedules, as well as vague representations and warranties. All final documents should be circulated to all parties. Counsel for each party should run a redline of that document against what they believe to be the last correct version of the document to ensure nothing was added or omitted in the final version.

The best way to ensure that all pages are properly executed is to create a signature packet for each signing party. A signature packet is a .pdf document containing a party’s signature pages. Including multiple copies of any signature pages intended for acknowledgement or recording is a good practice to maintain proper formalities and ensure backup pages are available in the event anything is lost in the mail or misplaced by a clerk’s office.

3. Failure to Address Closing Deliverables and Improper Handling of Operational Handover
Closings in the energy space often involve the real-time handoff of operational control — SCADA systems, interconnection agreements, power purchase agreements (PPAs), commodity trading platforms, and more. A lack of coordination can lead to operational disruptions or regulatory non-compliance.

Plan for the transition of operational control well before closing. Involve technical and compliance teams to ensure seamless continuity of service and regulatory reporting, or consider providing for a transition services period to give both parties adequate time to hand off these responsibilities.

4. Failing to Finalize Interrelated Agreements
Energy deals often hinge on interdependent agreements — joint venture contracts, offtake agreements, shared infrastructure use, operations and maintenance (O&M) contracts, and more. Not having these finalized or properly integrated can cause friction post-closing.

Build interdependencies into your closing checklist and make the final execution of related agreements a condition to closing.

5. Poorly Coordinated Closings
A closing involves many moving parts — wire transfers, escrow accounts, lien releases, and physical deliveries. Poor coordination can cause delays, missed deadlines, and even failed closings.

Set a realistic closing timeline, allow for contingencies, and have a closing coordinator or lead counsel oversee the process to keep everything on track.

6. Improper Handling of Funds and Escrows
Mishandling escrow instructions, failing to verify wire transfer details, or not securing final payment confirmations can create financial risk and liability.

Always use a trusted escrow agent or attorney and double-check all wiring instructions and fund releases, and use two-factor authentication to protect against potential fraud.

7. Inadequate Communication Among Parties
Lack of communication between buyers, sellers, lenders, and counsel can result in misunderstandings, conflicting actions, or overlooked obligations.

Hold pre-closing meetings or calls with all parties involved in the transaction at a frequency that makes sense for the sophistication of the parties and the contemplated transaction. We recommend holding at least bi-weekly closing calls for 2-3 weeks leading up to the closing, and daily calls the week of closing. Clear, consistent communication is key to avoiding last-minute chaos.

8. Neglecting Post-Closing Obligations
The transaction doesn’t end at the closing table. Post-closing covenants such as filings, settlement statements, ongoing disclosures, tax elections, and employee transitions are often overlooked.

Maintain a section for post-closing action items on your closing checklist and calendar of deadlines to ensure proper follow-through on all post-closing requirements.

Closings in commercial transactions can be complex and high-stakes. But with the right preparation, expert advice, and a sharp eye for detail, most pitfalls can be avoided. Treat the closing not just as a formality, but as a critical phase that demands focus and precision — your deal depends on it. Our Transactions and Corporate Teams at RR&A understand the energy landscape — and know how to navigate the closing process from permit to pipeline. If you’re ready to close with confidence, contact us! We’re here to help ensure your deal crosses the finish line smoothly and securely. Let us turn complexity into clarity.