Definition - What does Closing Memorandum mean?
A closing memorandum is a narrative used to interpret the clauses in a purchase and sale agreement after the deal has closed. This document is also known as the closing agenda.
Divestopedia explains Closing Memorandum
The closing memorandum is drawn up by the acquirer's lawyers as they typically have control over the updates made to the purchase agreement. The memorandum is for use at a later date to interpret the clauses included in the agreement. Although it is included with the purchase agreement, it is not a binding or legal document.
The closing memorandum includes the following:
- Representations and warranties for any legal actions
- Warrants as it concerns suppliers
- Stock compensation in consideration of the stock price during the deal closing process
- Background information regarding the transaction
- Any unusual issues and the method used to address them
The memorandum is used to review the historical transaction information and resolve any settlement differences from the purchase agreement, should any arise.