Your Checklist Is Ready

1. Know How You Are Paying

• Identify your funding source(s): SBA 7(a) loan, seller financing, ROBS 401(k) rollover, cash, or work-to-earn arrangement
• If using an SBA loan, get pre-qualified by a lender first. Sellers will not take you seriously without it.
• Consider a blended structure. A common combination is 90% SBA, 5% seller financing, 5% buyer cash or ROBS.
• If speed matters, cash and seller financing close fastest.

2. Know What You Are Buying

• Asset purchase or share purchase? Most deals under $10M are asset purchases.
• Tangible assets: equipment, inventory, vehicles, fixtures
• Intangible assets: brand/goodwill, customer relationships, vendor relationships, phone numbers, domain names, social media accounts, online reviews/ratings
• Contracts that need assignment: leases, vendor agreements, customer contracts, licensing agreements
• Intellectual property: trademarks, patents, trade secrets, proprietary software
• Certifications, licenses, or permits that may not transfer in an asset sale (may require a share purchase instead, which changes the risk profile)
• Real estate: is it part of the deal, or is there a lease to assign or renegotiate?

3. Know Your Basic Terms

• Proposed purchase price or valuation method
• Proposed timeline from LOI to close
• Exclusivity/no-shop period
• Transition period (seller staying on after closing)
• Non-compete agreement for the seller
• Contingencies: financing, due diligence period, landlord consent

4. Know Who Is Involved (and Who Should Not Be Yet)

• Is there a broker? If buyer and seller found each other directly, a broker is not required. Brokers typically take 5%+ of the deal; an attorney typically costs less than 1%.
• If a broker is involved, who hired them and whose interests do they represent?
• Broker-provided closing documents are rarely attorney-drafted and tend to be seller-friendly or poorly protective of either side.
• Do you have your own attorney and CPA reviewing the deal?
• Identify key employees whose departure would hurt the business.
• Identify key customer and vendor relationships critical to business value.
• DO NOT tell employees, customers, or vendors before closing. People get spooked and leave. Loss of a key person has killed deals.

5. Do Your Homework Before the LOI

• Review 2-3 years of financials (P&L, balance sheet, tax returns)
• Understand seller’s discretionary earnings vs. reported income
• Check industry comparables for valuation
• Check for outstanding litigation, liens, or tax issues
• Understand lease terms and remaining time

6. Things People Forget

• Who owns the online presence (Google Business Profile, website domain, social accounts)?
• Personal guarantees the seller has that you would be assuming
• Is the business name part of the deal or does the seller retain it?
• Pending or threatened litigation
• Environmental or regulatory compliance issues
• Seller’s email address, phone number, and customer communication channels
• Will you assume a real estate lease or start a new one?