Buying a business
Is Your Deal Really Completed? What Buyers Must Finish After the LOI
A signed letter of intent starts the real work. What a buyer still has to check, arrange and sign before a deal is actually complete.
By Michael D. Rubin, CEO & Founder · Updated September 2026 · 727 words
No. A signed letter of intent means buyer and seller agree on the main terms; the deal is complete only when due diligence is finished, financing is approved, the purchase agreement is signed and the money has been wired at closing. Between those two points, many deals are renegotiated and some fall apart. Buyers who treat the letter of intent as the finish line are the ones most often surprised.
A letter of intent (LOI) is a mostly non-binding written offer that sets out the price, the structure, key conditions and usually a period of exclusivity in which the seller stops talking to other buyers. That exclusivity gives you time to confirm what you are buying. Use it well.
Build your team before the clock starts
Exclusivity periods pass quickly. Line up your team before you sign: a transaction attorney, a CPA who has worked on acquisitions, your lender and an insurance advisor. Depending on the business, you may also need an equipment appraiser, an environmental consultant or a real estate specialist.
The member buyers most often leave out is an operations person, someone who has run a business like this one. Accountants read the numbers; an experienced operator notices the worn-out machine, the scheduling bottleneck or the foreman everyone quietly depends on.
What due diligence has to cover
Due diligence is your detailed check of the business before closing. Both sides take part: the seller supplies records and answers, and your team tests them.
| Area | What to check |
|---|---|
| Industry and pricing | Sales by product or service line, pricing and discount policies, warranties, and how the company compares with industry norms |
| Balance sheet | Age of receivables and bad debts, inventory counts and obsolete stock, liabilities that are not on the books |
| Customers | Who the key customers are, how long they have bought, their contracts and renewal dates |
| Current performance | Results since the last statements, compared with budget and the prior year; orders and pipeline |
| People | Key managers and their roles, pay and agreements, and who is likely to stay |
| Assets and legal | Age and condition of equipment, environmental issues, and whether trademarks, patents and licenses transfer |
Watch the months between the LOI and closing
The business keeps operating while you examine it. Ask for monthly results throughout due diligence, not only the historical statements. If revenue drops or a major customer leaves between signing and closing, you need to know, and the purchase agreement should say what happens if the business changes materially before closing.
If due diligence turns up a real problem, you can renegotiate, ask for protection in the purchase agreement or withdraw. Do it promptly and explain why. A buyer who reopens the price over minor issues, known as retrading, damages trust and can lose the deal; our answer on preventing a price retrade explains how sellers see it.
Financing and documents run on their own timelines
Your lender runs its own review, often including an appraisal of assets, and sets conditions of its own. Start early and keep the lender informed of what you find. Our page on business financing outlines the usual structures and what lenders ask for.
Meanwhile the attorneys draft the purchase agreement, which replaces the LOI with binding terms: representations and warranties, indemnification, non-compete and employment agreements, and the conditions for closing. Read the drafts carefully, because these terms decide what protection you have if something goes wrong later. Legal documents are step nine of a professionally run sale, and closing with funds wired is step ten.
Questions to answer before you sign at closing
- Do I know exactly what is included in the sale and what is not?
- What keeps new competitors out, and does it still hold?
- What is the company's real competitive advantage, and will it survive the owner leaving?
- Which assets could be sold if I needed cash?
- Where will growth come from over the next few years?
- How dependent is the business on the seller, and is the transition agreed in writing?
How MDR & Associates handles the stretch after the LOI
We represent sellers, and we manage due diligence on their side: organizing documents, answering questions quickly and keeping every party on the timeline, so buyers are not left waiting on information. A principal of the firm stays involved through closing. To see the companies we are selling, start at our buyer page.
Where this fitsBuy a business in Texas →
Questions owners ask next
Can a seller back out after signing a letter of intent?
Usually yes, because most of an LOI is non-binding. The exclusivity and confidentiality clauses are typically binding, so the seller cannot shop the company to others during the exclusive period. Either side can still walk away before the purchase agreement is signed, which is why momentum and good faith matter.
What if due diligence takes longer than the exclusivity period?
The parties can agree to extend it, and often do when progress is steady. If the buyer is slow or keeps adding requests, the seller may refuse and return to other interested buyers. Keep your team moving, and ask for any extension early and in writing rather than at the last minute.