Buying a business follows a defined sequence: set acquisition criteria, sign a nondisclosure agreement, review the financials, submit a letter of intent, complete due diligence, arrange financing, and close. The order matters. Buyers who get valuation and financing groundwork done early win better deals, and they close faster than buyers who improvise their way through the process.
Key Takeaways
- Write your acquisition criteria down before you search. A one-page deal box saves months of wasted listing reviews.
- Get an independent valuation before you make an offer, not after the seller counters.
- Per the Axial 2026 Independent Sponsor Report, 74.3 percent of sponsors now provide capital support letters before the LOI. Proof of funding wins deals.
- Due diligence verifies, it doesn’t discover. The big questions should be answered before you sign the LOI.
How Do You Define Acquisition Criteria and Start the Search?
Start with a written deal box: industry, geography, revenue or earnings range, and how involved you want to be after closing. Then search broker listings, online marketplaces, and direct outreach. You’ll sign a nondisclosure agreement before seeing confidential details, and most sellers also want a buyer profile and some evidence you can fund a purchase.
The deal box does two jobs. It keeps you from chasing businesses that don’t fit your skills or your capital, and it tells intermediaries you’re serious. A vague buyer gets vague treatment. A buyer who can say “service businesses in the Gulf South, owner transitioning out, earnings in a range I can finance” gets the first call when a matching listing comes in.
Independent sponsors face an extra credibility test, since sellers know the capital comes together after the deal is found. If that’s your model, be ready to explain your backers and your track record early. Understanding how sellers view strategic versus financial buyers helps you position your offer against the competition. And if you’re unsure who does what on a deal team, start with the difference between a business broker and an M&A advisor.
What Should You Review Before Making an Offer?
Review the last few years of financial statements, the recast earnings, customer concentration, and the lease before you write anything. Pricing context matters too. Per the IBBA and M&A Source Market Pulse for Q1 2026, median Main Street multiples ran 2.0 times SDE for deals under $500,000, 2.8 times for $500,000 to $1,000,000, and 3.0 times for $1,000,000 to $2,000,000.
Small business financials rarely tell the whole story on their own. Owners run personal expenses through the company, pay themselves above or below market, and book one-time items that won’t recur under your ownership. That’s why recasting the financial statements comes before any serious pricing conversation. You’re buying the earnings a new owner can actually expect, not the tax return.
Here’s where disciplined buyers separate from the pack. Before you put a number in writing, get an independent business valuation before you make an offer, performed under NACVA Professional Standards methodology. BizBuySell’s 2025 Year-in-Review put the average sold Main Street business at about 2.6 times seller’s discretionary earnings, but averages hide a wide spread. A defensible valuation tells you where this business sits in that spread, and it gives you a walk-away number before emotions enter the room.
How Does the Letter of Intent Work?
A letter of intent sets price, structure, exclusivity, and timeline in mostly nonbinding terms. It’s the document that takes a deal off the market, so sellers read it closely. Per the Axial 2026 Independent Sponsor Report, published October 2026, the median winning LOI on that platform came in at 5.30 times EBITDA.
The LOI is short, but every line carries weight. Price and structure get the attention, yet exclusivity and the diligence timeline often matter more in practice. A long exclusivity period with no milestones lets a slow buyer tie up a seller for months. A tight one forces discipline on both sides. If you want the full anatomy, we’ve broken down what a letter of intent is and why it matters.
Credibility wins at this stage, not just price. The same Axial report found independent sponsors won 27 percent of closed deals on the platform in 2026 year to date, and the sponsors who won were the ones who showed committed capital relationships up front. Individual buyers can borrow the same playbook: a lender prequalification letter attached to your LOI does the talking. Structure can bridge gaps too. Seller notes and earn-outs let a buyer and seller share risk when they disagree on the future.
What Happens During Due Diligence and Financing?
Confirmatory due diligence verifies what the seller told you, and financing turns the LOI into a fundable deal. Expect to work through financial, legal, tax, and operational records in parallel while your lender underwrites the business’s cash flow. Many individual buyers fund the purchase with an SBA 7(a) loan.
On the financial side, the centerpiece is often a quality of earnings review: an independent check on whether the earnings you’re paying for are real, recurring, and correctly stated. Revenue recognition, addback support, and working capital trends get the hardest look. We’ve written about what QoE analysts actually find, and the short version is this: surprises found in diligence cost less than surprises found after closing.
SBA 7(a) financing deserves its own planning. Lenders underwrite the business first, asking whether historical cash flow covers the proposed debt with a cushion. They also weigh your industry experience, personal credit, and the equity you’re bringing to the table, and every owner above the program’s ownership threshold signs a personal guarantee. Seller notes often help the structure, especially when the lender asks that they sit on standby. None of this is exotic, but it rewards preparation. Buyers who talk to an SBA lender before the LOI rarely get blindsided in underwriting.
What Does This Look Like in Practice?
A composite from our practice, details changed to protect confidentiality. A plant operations manager wanted to buy an industrial services company within an hour of his home. He wrote a one-page deal box with us, then passed on two listings early on because they sat outside it. The third one fit.
He signed the NDA, worked through the recast financials, and ordered an independent valuation before drafting his LOI. The valuation flagged heavy customer concentration, so his offer paired a market price with a seller note tied to the top account staying through transition. The seller pushed back, then accepted once he saw the buyer’s lender prequalification letter. Diligence surfaced deferred maintenance on key equipment, and rather than retrading price, the parties split the catch-up cost at closing. His SBA lender liked his operating background and the business’s steady cash flow, the seller note went on standby, and the deal funded on the lender’s timeline with the seller staying on for a planned handoff. Nothing clever happened. He just did the steps in order.
What Happens Between the Purchase Agreement and Closing?
The purchase agreement converts the LOI into binding terms: price, representations and warranties, indemnification, and closing conditions. From signing to funding, the work shifts to third parties, meaning your lender, the landlord, licensing boards, and both attorneys. Buyers who track those approvals on a shared checklist close on schedule far more often.
Don’t underestimate the third-party items. Landlord consent to a lease assignment can take weeks, and in Louisiana, license and permit transfers have their own clocks. Your attorney should be negotiating reps and warranties while those requests are already in motion, not after.
Closing day itself is mostly signatures and wires. The real work afterward is transition: employee communication, customer introductions, vendor account changes, and whatever consulting period the seller agreed to. Plan the first ninety days before you own the first one.
Frequently Asked Questions
How long does it take to buy a business?
It varies more than buyers expect. Lender underwriting, landlord consent, license transfers, and the seller’s responsiveness all drive the calendar. Deals with organized financials and a prepared buyer move fastest. The best way to shorten the timeline is to line up your lender and your advisory team before you sign a letter of intent.
Do I need my own advisor to buy a business?
You don’t need one, but most listings are represented by the seller’s broker, whose duty runs to the seller. Your own advisor, attorney, and accountant level the field on price, structure, and diligence. At minimum, get independent eyes on the financials and the purchase agreement before you commit.
What do SBA 7(a) lenders look for in an acquisition?
Lenders underwrite the business’s historical cash flow first: can earnings cover the proposed debt with room to spare? They also weigh your industry experience, personal credit, the equity you’re injecting, and any seller note. Clean tax returns that match the financial statements make approval far smoother.
Thinking about buying a business in Louisiana or anywhere in the Gulf South? We’ll walk you through criteria, valuation, financing, and closing without the guesswork. Book a free consultation and bring your questions.
Joel F. Duran, founder of Duran Advisors in Metairie, holds the CM&AA, M&AMI, CEPA, and CM&AP designations and has spent 15+ years valuing and selling businesses across the Gulf South.