What Happens After the LOI: The Heart of the Sale Process

What Happens After the LOI: The Heart of the Sale Process

For many business owners, signing the Letter of Intent (LOI) feels like crossing the finish line. In reality, it marks the beginning of the two most important phases of the sale process: due diligence and transition planning. This is where the buyer takes a deep look inside the company and where the real handoff begins to take shape.

Diligence is when the buyer takes a closer look at your business to smooth out all the details. Different buyers will handle diligence differently. Most buyers, such as PE and strategics, will bring on outside advisors for specific diligence and can do painstakingly deep dives around financials, tax records, contracts, and more. For instance, a Quality of Earnings (QoE) report is a common form of accounting diligence that independent auditors are brought in to make. While PE firms prefer to run formal, high-intensity processes, search fund buyers are typically more involved themselves, creating more opportunity for mutual understanding and flexibility.

All in all, no business is perfect: buyers expect to see some issues, whether it is a pending contract renewal, some inconsistencies in accounting, or an outdated system. What matters is that as the seller, you are upfront and as organized as possible to help make this process smoother.

Alongside diligence, buyers begin working with you to plan for the transition of ownership. Search fund buyers are typically flexible and eager to learn directly from the seller. Whether you want to keep family members involved, preserve long-standing partnerships, or simply want to keep some skin in the game, they will work with you to support those goals. Because they plan to step into the day-to-day themselves, they know your insights, relationships, and experience are essential to making that transition work. When all is said and done, what matters most is being transparent, responsive, and organized, qualities that can turn a difficult diligence process into a manageable one. Diligence can take anywhere from 2 to 4 months, depending on the buyer you choose and your business’s specific needs.

Key Takeaways

• Due diligence is about transparency and preparation, not perfection.

• Search fund buyers take a hands-on approach, focusing on learning rather than auditing.

• A thoughtful transition protects employees, customers, and the business’s culture.

• The right buyer makes it easier to step away knowing your business is in good hands.