1. Introduction: The Deal Is Just Getting Started
This phase is where people get cold feet, financing falls apart, lawyers slow things down, and sellers suddenly “remember” they have a million dollars in unrecorded cash sales. It’s a grind.
But it’s also where real money is made—or lost. Buy right, and you’ve got an asset that prints cash (note: you will still need to work, a 100% absentee business is a crock of 💩). Buy wrong, and you’re stuck in an operational nightmare you can’t escape from.
This guide will walk you through:
- How to structure your offer so the seller says “yes”
- What to look for in due diligence so you don’t buy a lemon
- How to finance your deal
- What legal landmines to watch out for
- How to close the deal and take control smoothly
Let’s break it down.
2. Making the Offer: How to Get a Seller to Say “Yes”
You’re ready to make an offer. The goal? Structure it in a way that gets the seller on board while protecting yourself.
A. The LOI (Letter of Intent)
This is the first formal step. The LOI is non-binding (except for exclusivity), meaning it’s more of a “let’s do this deal” handshake than a legal contract.
What to include in your LOI:
✅ Purchase price (and how you’re paying for it)
✅ Deal structure (SBA loan, seller financing, cash, etc.)
✅ Exclusivity period (so the seller doesn’t shop your deal)
✅ Key conditions (due diligence, financing approval, etc.)
📌 Resource: Need a solid LOI template? This is where lawyers come in. You could pay one now if you want, or better yet just get your hands on a solid template and use it across your deals. Here's one you can request for free from SMB Law Group, see what you can find on Searchfunder (people are often willing to share), or talk to your likely lawyer and see if they have one they can pass over. Hell, brokers are often happy to share just make sure it's not too skewed in their favor.
B. Offer Structures That Win Deals
Most sellers don’t just want a high number. They want certainty—and a deal that makes sense for them. Here’s how to structure an offer that gets accepted:
1. All-Cash Offer (Rare, But Powerful)
✅ Most attractive to sellers
❌ Ties up a lot of your capital
2. SBA 7(a) Loan (Most Common for SMB Acquisitions)
✅ Allows you to finance 80-90% of the deal
✅ Sellers like it because they get their money upfront
❌ SBA process is slow and annoying (more on that later)
3. Seller Financing (Best Way to Align Interests)
✅ You pay less upfront, seller has better tax position over time
✅ Keeps seller invested in your success
❌ Seller might push back if they don’t need the money
3. Due Diligence: Making Sure You’re Not Buying a Dumpster Fire
Once the LOI is signed, you’ll start due diligence—aka “figuring out if this business is actually as good as it looks.”
A. The Three Buckets of Due Diligence
1️⃣ Financial Due Diligence (aka FDD // are the numbers real?): you can choose to DIY it if you know what you're doing, but this is where a Quality of Earnings (QoE) report comes in.
- Tax returns (at least 3 years) – This is the most reliable financial record.
- P&L Statements + Balance Sheets – Look for revenue trends and expense spikes.
- Bank Statements – Verify that deposits match reported revenue.
- AR/AP Aging Reports – Any customers who owe money that you’ll never collect?
📌 Resource: If you need an accountant, check out some that we know and recommend here.
2️⃣ Operational Due Diligence (How does the business actually run?)
• Who are the key employees?
• What systems & processes are in place?
• Customer concentration: If one client is 40% of revenue, that’s a risk.
• Contracts & leases: Are they transferrable? What’s expiring soon?
📌 Tactic: Secret shop the business. Call as a customer and see how things actually work but do NOT walk in and say hey I'm looking to buy this from the owner so wanted to talk to you. Not cool.
3️⃣ Legal Due Diligence (What legal landmines are hiding?)
• Any pending lawsuits or liabilities?
• Intellectual property issues?
• Licensing & compliance requirements?
4. Financing: How to Actually Get the Money
A. SBA 7(a) Loan: What to Expect
The SBA process is slow, frustrating, and full of paperwork—but it works.
Typical SBA Loan Terms:
• ✅ 90% financing (you put down 10%)
• ✅ 10-year term
• ✅ Interest rate ~11-12% (as of 2024)
📌 Tactic: Get prequalified early with an SBA lender or SBA loan broker so you know what deals you can afford. Check out our lender recommendations here.
B. Alternative Financing Options
1️⃣ Seller Financing – Can be 10-50% of the deal. Helps get a better price.
2️⃣ Investor Partnerships – Bring in capital partners (but lose some control).
3️⃣ HELOC or Personal Loans – Risky, but an option if needed.
5. Closing the Deal: The Final Steps
A. The Purchase Agreement - make sure you have a lawyer at this point!
This is the final, legally binding contract. Key sections include:
✅ Purchase price & payment terms
✅ What’s included in the sale (equipment, inventory, IP, etc.)
✅ Seller transition support (how long they’ll help post-close)
✅ Non-compete agreement (so they don’t start a competing business next door)
📌 Tactic: Make sure the seller sticks around for at least 3-6 months for a smooth transition. A seller note will help to incentivize their lean in too.
B. Closing Day: What to Expect
• You sign a ridiculous amount of paperwork
• The lender wires funds to the seller
• You officially own a business
📌 Tactic: If employees don’t know about the sale, time the announcement right. Sellers usually handle this after the money clears.
6. What Happens After Closing?
Now you own the business. Here’s how to avoid post-close chaos.
A. First 30 Days: Observe & Learn
• Don’t make big changes immediately.
• Spend time with key employees.
• Get a feel for how things actually run.
B. First 90 Days: Start Implementing Changes
• Address low-hanging fruit (easy wins).
• Establish yourself as the new owner.
• Keep an eye on cash flow (things can get tight post-close).
📌 Tactic: Make a list of “quick wins” (things you can improve fast without upsetting the team).
7. Final Thoughts: Transacting is a Grind, But Worth It
Closing a deal is not easy—it’s a rollercoaster of paperwork, negotiations, and last-minute surprises. But if you do it right, you’ll walk away with an asset that generates real wealth and gives you control over your future.
Stay patient, get the right team around you, and don’t let a good deal die because of minor roadblocks. The ones who win M&A keep pushing until the deal is done.
Now, let’s talk what happens next: operating and growing your new business.
