For many business owners, receiving and accepting a Letter of Intent (LOI) feels like the finish line. It is often the beginning of one of the most important stages of the M&A process. Once an LOI is signed, the buyer typically begins a deeper review of the business, and the transaction moves into due diligence, documentation, financing, and final negotiations. Even after agreeing on headline terms, a deal can still lose momentum.
One of the most common challenges is unexpected information during due diligence. Buyers may uncover issues involving financial reporting, customer concentration, contracts, employees, or legal matters that were not identified earlier in the process. These discoveries do not necessarily end a transaction, but they can lead to additional questions, changes to deal terms, or requests for additional protections.
Working capital is another area that can create tension. Buyers generally expect a business to be delivered with a level of working capital necessary to operate normally after closing. If the buyer and seller have different expectations about what that level should be, disagreements can arise late in the process. Establishing expectations early and supporting them with historical data can help prevent surprises.
Financing can also affect timing. Even when a buyer is committed to the transaction, obtaining lender approval and completing financing requirements can take time. Delays can put pressure on both parties, particularly when a seller has already begun planning for life after the transaction.
Communication is critical throughout this stage. A lack of timely responses, unclear expectations, or unresolved issues can cause frustration and slow progress. Experienced advisors help keep the process organized by coordinating information, managing timelines, and addressing potential obstacles before they become larger problems.
Perhaps most importantly, owners should continue running the business as usual. A strong performance between signing the LOI and closing reinforces buyer confidence. Significant changes in revenue, expenses, customers, or operations can create new questions and potentially reopen discussions around the transaction.
At Aberdeen Advisors, we help business owners navigate the process from LOI through closing, anticipating challenges and keeping all parties focused on reaching the finish line. Signing an LOI is an important milestone, but careful execution after that point is what turns an agreement into a successful transaction.
Aberdeen Advisors is a boutique mergers and acquisitions firm. Our dedicated team is committed to helping business owners successfully navigate the intricacies of an ownership transition. Additionally, our team is made up of former business owners and C-suite executives who have run and sold companies. We pride ourselves on a successful track record of shepherding business owners through the M&A process to ensure a successful outcome.