Step 4 — Overview

Overview of the Process

  • Term Sheet: The buyer and seller complete the Term Sheet, which outlines the essential terms of the transaction before the letter of intent (LOI) or offer is prepared.
  • Letter of Intent/Offer: We customarily prepare the offer if the buyer is an individual. The buyer prepares an LOI if they are a company or private equity group.
  • Due Diligence: Due diligence begins once the offer or LOI is accepted.
  • Purchase Agreement: We customarily prepare the purchase agreement if the buyer is an individual. The buyer prepares it if they are a company or private equity group.
  • Closing: The closing is handled virtually or face-to-face.
  • Transition: The seller trains the buyer and assists with the transition period.

Tips

Most sellers get excited and lose their focus when they find a potential buyer. Keep in mind that more than 50% of deals don’t make it to the closing table. We almost never have a sale that goes perfectly. Sometimes, things are forgotten, or other issues crop up. Relax. It’s par for the course.

Here are some tips for helping ensure that the sale goes as smoothly as possible:

  • If you have a strong working relationship with the buyer, you can often easily solve problems that arise post-closing. Do your best to maintain an excellent relationship with the buyer throughout the process so you have the foundation for solving problems that may arise later.
  • Keep your focus on running the business after you accept the offer. It’s best to continue to maintain the revenue and profitability of the business throughout the closing period. The buyer will expect a price concession if the revenue or profitability declines after the offer is accepted.
  • Unless you signed an exclusivity provision, keep your business on the market until the purchase agreement is signed and all contingencies are met or removed. Keeping your business on the market helps maintain your negotiating position, which helps keep buyers on their toes and prevents them from playing games.
  • Act prepared and motivated, but not desperate. Use us as a buffer between you and the buyer to help maintain emotional objectivity. Read this article for additional tips on negotiating and positioning.