On the evening the investment agreement is signed, every founder has the same question: how soon the money will reach the account. The answer is usually longer than expected, because signing is not the end of the process but the start of its second half. Closing is the stage at which the agreed conditions are satisfied, the investment amount is paid and the shares come into existence in the investor’s name; between signing and closing lie weeks, and in a difficult round, months.
The scene we see most often in practice runs like this: the founder announces to the team on signing day that the round is closed, and spends the next morning shuttling between the notary, the trade registry and the bank. In Türkiye, closing is not largely an exchange of documents as it is in US practice; it is a sequence of corporate steps tied to the capital increase mechanics of the Turkish Commercial Code (Law No. 6102) and dependent on registration. The timetable is therefore bound to a certain minimum length regardless of how cooperative the parties are.
Three instruments govern this interval: the conditions precedent list, the closing checklist and the long stop date. The more precisely each is drafted, the fewer surprises the post-signing period holds. At term sheet stage these items are usually dealt with in a single line; the real content takes shape in the investment agreement.
The conditions precedent list is a working roadmap, not a formality
Conditions precedent are the steps that must be completed before the investor’s payment obligation arises. A typical list includes adoption of the amended articles by the general assembly, execution of intellectual property assignment agreements with founders and key employees, creation of the ESOP pool, obtaining change-of-control consents under critical customer or loan agreements, and remedying the gaps identified during due diligence.
In negotiation, the list deserves two kinds of scrutiny. The first is ownership: each condition should name the party responsible for completing it, because an unowned condition is a source of indefinite delay. The second is measurability: wording such as “in form and substance satisfactory to the investor” hands the investor what is in effect a unilateral walk-away right. Whether a condition has been satisfied should be capable of being read off a document by a third pair of eyes.
The slowest item on the list is almost always third-party consents. Approval processes at a bank, a critical customer or a landlord are outside the company’s control, and their internal machinery can take weeks. The most effective way to shorten the calendar is therefore to inventory the consent-triggering contracts before signing, to open the consent correspondence without waiting for signing day, and to move any consent that is not genuinely critical off the conditions list and into a post-closing undertaking. Investors are open to that distinction within reason; nobody wants closing held hostage to the approval of a lease.
Why the money does not simply arrive “against shares”: the TCC mechanics
In Türkiye a venture round typically closes through a capital increase: the general assembly resolves on the increase, new shares are issued at nominal value with the balance booked as share premium, the investor pays the subscribed amount and the increase is registered with the trade registry. The subscription agreement between the investor and the company is the contractual frame around this mechanism.
The practical consequence of this chain is that payment on signing day is not possible, because the shares that would be paid for do not yet legally exist. Blocking the funds at the bank, registering the increase and then entering the investor in the share register must follow a fixed order. The closing checklist is precisely the document that turns this order into a minute-by-minute plan: which resolution passes before which notary on which day, what date the blocking letter carries, who files for registration. A well-prepared checklist turns closing day from an exercise in crisis management into an ordinary procedure.
Where a foreign investor is involved, the list gains another layer: apostilles on powers of attorney executed abroad, notarised translations of corporate documents and obtaining a tax number for the foreign investor are practical prerequisites of the registration stage. Each of these documents queues at its own institution; a missing apostille discovered in closing week can by itself shift the calendar by weeks. Experienced teams start assembling this document set in parallel with signing.
Who runs the company between signing and closing?
Between signing and closing the company legally remains in the founders’ hands, yet the investor priced it as it stood on signing day. That tension is resolved through interim covenants: the company is run in the ordinary course, no material agreements are signed, no borrowing or distributions are made, and the terms of key employees are left untouched. The investor will also require the representations and warranties to be true at closing; in practice this repetition is evidenced by a bring-down certificate.
On the founder side, the point to watch is that these covenants are not drafted so broadly that they paralyse the business. If signing a new customer contract in the interim period requires investor consent, what has been created is not a covenant list but a pre-closing veto regime. The sensible approach is to calibrate thresholds to the company’s actual volume of business and, where consent is genuinely needed, to give the investor a short deadline to respond.
The most contested provision of the same period is the material adverse change (MAC) clause: the investor’s right to withdraw from closing if the company’s position deteriorates fundamentally. The investor sees it as natural insurance; for the founder, a loosely drafted MAC clause means the round can be unwound at any moment. The balanced outcome in negotiation is a clause that carves out causes external to the company, such as general economic conditions and developments affecting the whole sector, and requires the deterioration to be company-specific, material and durable in character.
Whom does the long stop date protect?
The long stop is the final date after which either party may withdraw if the conditions remain unsatisfied. The interval between signing and closing typically runs six to twelve weeks; the long stop is set with a safety margin on top, for example ninety days from signing. The date protects both sides: it saves the investor from an open-ended commitment, and it saves the founder from being tied to a round that has quietly died while being unable to seek other financing.
Two details matter in negotiation. The first is an extension mechanism: if the only outstanding condition is outside the parties’ control, such as a regulatory consent, an automatic or mutually agreed extension should be available. The second is a fault rule: a party that has delayed a condition within its own responsibility should not be able to rely on that delay to walk away. Otherwise the long stop offers an elegant exit to whichever party has lost interest in closing. Founders should also think past the long stop: unless the agreement states clearly that exclusivity falls away on termination, what happens to costs already incurred and whether claims survive, the aftershocks of a dead round can rumble on for months.
When do escrow and tranche structures come into play?
Paying the investment in instalments, a tranche structure, is usually tied to milestones: launching the product, reaching a revenue threshold, signing a key partnership. Founders should watch two risks. If a milestone is drafted subjectively, each instalment becomes a fresh negotiation; and because the TCC mechanics may require each instalment to go through its own capital increase and registration round, transaction cost and calendar burden grow with the number of tranches.
An escrow account answers a different need: holding part of the price in a neutral account until a risk identified in due diligence has been cured. A tax inspection, a pending dispute or an incomplete intellectual property assignment are the typical examples. The release conditions in the escrow letter should be drafted with the same discipline as the conditions precedent, legible from the documents alone; otherwise the escrow postpones the dispute rather than resolving it.
Where several investors join the round, there is also a question of simultaneity: either everyone closes on the same day, or the lead investor closes first with the others joining within a set period. Structures permitting a staggered closing give smaller investors flexibility; but since every accession repeats the same corporate steps, the agreement should state clearly the final accession date, that accessions occur on identical terms, and that a late investor cannot block the round.
To pull the threads together: signature is a reason to celebrate, but the moment the money lands is closing, and the stretch between the two is a period with a law of its own. The most productive preparation a founder can make is to take ownership of the conditions precedent list before signing, with a responsible party and a date against each item, to freeze the closing checklist early together with the investor’s counsel, and to negotiate the long stop and its extension rules against their own financing runway. Mapping the corporate steps of the capital increase with the notary and the bank at the start of the process eliminates most of the surprises closing week would otherwise bring.
This article is provided for general information only and does not constitute legal advice. Please seek legal support for an assessment of any specific matter.
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