OnwardLearn · Selling · Step 9. Prepare to close
Keeping the business running strong until closing
The short version
- The weeks between the [letter of intent](/learn/reference#letter-of-intent "The offer document. It sets out the price, the structure and the main terms, and starts diligence.") and closing are when many businesses slip.
- Owners get pulled into the sale, and results fall. Buyers notice.
- A drop in results gives the buyer a reason to ask for a lower price, and can put the buyer's loan at risk.
- Keep selling, keep serving customers and keep a close eye on the numbers until the day you close.
- Do not make big changes without the buyer's agreement. Most purchase agreements require it.
Why this matters
Due diligence and the lender's review take time and attention. Owners spend hours on requests, meetings and calls. Meanwhile, the business still needs its owner.
When results slip during a sale, the buyer sees it in the monthly numbers you are sharing. A weaker month or two can lead to a request for a lower price. It can also lower the earnings the lender uses to approve the loan.
What to protect
- Sales. Keep quoting, following up and winning new work.
- Customers. Keep service at the level customers expect.
- Key people. Keep them engaged and informed as far as confidentiality allows. Lesson 5.7 covers who knows what.
- The books. Keep them current every month, so the buyer sees steady, clean results.
- Equipment and facilities. Keep up normal maintenance.
What not to do
Most letters of intent and purchase agreements require you to run the business in the ordinary way until closing. That usually means no major changes without the buyer's agreement, such as:
- Raising or cutting pay outside normal practice.
- Signing or ending major contracts.
- Taking on new debt or selling equipment.
- Changing prices sharply.
- Taking unusual amounts of cash out of the business.
If something important comes up, talk to your M&A attorney and tell the buyer.
Share your time
If you can, let your broker or advisors handle more of the sale work, so you can keep running the business. The sale depends on the business staying strong.
Take this to your own people
The questions for this topic, for your attorney, your accountant or your lender.
- For your M&A attorney: "What am I allowed to change in the business before closing, and what needs the buyer's agreement?" Listen for: a clear list drawn from the letter of intent or draft purchase agreement.
- For your accountant: "Can you close my books quickly each month during the sale, so the buyer sees current results?" Listen for: a monthly schedule you can keep.
- For a broker or advisor: "Which parts of the sale work can you take off my plate?" Listen for: specific tasks, so you can stay focused on the business.
When you’re ready
How a sale actually happens, in plain language — before you decide anything. Make a free account — nothing is shared