If the period between agreeing on the offer and closing is lengthy, the Seller will want the benefit of the profit generated during that period and can agree to adjustments at closing often called 'stub' payments. The advantage is that it eliminates the uncertainty and post-sale efforts involved in producing closing accounts. The disadvantage is that the Seller is constrained in running their business and if the transaction does not close they could lose momentum during that period when they may have made other investment decisions, etc. It can also become very complex to manage over the due diligence period to ensure there are no anomalies so generally this requires more advisor time and focus.
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