Key Considerations for a Successful M&A Transaction

By Michael D. Rubin, CEO & Founder · Updated September 2026 · 719 words

A successful M&A transaction depends on four things sellers often misjudge: the deal is still being negotiated after the letter of intent, debt is settled out of the price rather than ignored, not every offer is backed by real money, and a sale needs a professional team. Get these right and most deals close on the terms agreed. Get them wrong and the price tends to shrink between signing and closing.

The points below apply whether the buyer is an individual, a competitor or a private equity group, and whether the company is worth a few million dollars or much more.

The letter of intent starts the hardest part

A letter of intent (LOI) sets the price, the structure and a period of exclusivity during which the buyer examines your company. It is usually non-binding on price. Everything it leaves vague, such as how working capital is measured, which liabilities stay with you, how long you stay after closing and what promises you make about the business in the purchase agreement, gets negotiated in the weeks that follow. Due diligence also tends to surface issues neither side expected.

Two habits protect you. First, push for detail in the LOI itself, while other buyers are still interested and you have leverage. Second, treat the time between the LOI and closing as active negotiation, with your advisor and attorney involved, rather than as paperwork.

Keep a written note of what was agreed in each conversation, and make sure it reaches the attorney drafting the documents.

Debt comes out of the price

Most lower-middle-market companies are sold on a cash-free, debt-free basis. The buyer pays a price for the business, bank loans, equipment financing and similar debts are paid off from the proceeds at closing, and the seller usually keeps excess cash. Owners who expect the headline price to arrive in their account are often surprised.

Equipment and vehicle leases, deferred pay owed to staff and unpaid taxes may also be treated as debt, so ask early which items the buyer intends to count.

Buyers sometimes propose to take on certain debts instead, which simply lowers the cash they pay. Either way, before you compare offers, work out what each one means after debt, fees and taxes. Our article on debt and excess cash in a sale explains the mechanics, and the guide on comparing offers shows how to line them up side by side.

Check that the buyer can actually pay

An attractive offer from a buyer without the money is worse than no offer. It takes the company off the market for weeks and can end with nothing. Before you sign an LOI, find out:

• How the purchase will be funded: cash, a committed equity fund, an SBA or conventional loan, or seller financing
• Whether the buyer has closed acquisitions before
• What conditions the lender or investors will attach
• Who at the buyer can actually approve the deal

Build the team before you need it

A buyer who cannot answer these questions clearly is not necessarily unserious, but you should know before you give up your other options.

Lenders have their own requirements and timelines, and a buyer relying on a loan should be able to show a lender's early interest. Our business financing page describes the structures used most often.

A sale touches valuation, tax, law, negotiation and daily operations all at once. Owners who try to cover it alone either lose time running the company or lose ground in the deal. The usual team is an M&A advisor to run the process and negotiate, a transaction attorney for the documents, and a CPA for the financials and tax planning. Each should be involved from the start, not called in once a problem appears. The owner's role is to keep the business performing and to make the decisions.

What we do in that situation

MDR & Associates screens every buyer with a confidentiality agreement and a financial profile before they see your details, negotiates multiple LOIs at the same time, and stays in the deal through due diligence and closing alongside your attorney and CPA. To see what a sale might look like for your company, start with a free valuation snapshot.

We also help you judge each offer on what you keep, not only on the headline number.

Where this fitsSell your business in Texas →

Questions owners ask next

Can a buyer lower the price after signing the LOI?

Yes. Because most LOIs are non-binding on price, a buyer can propose a lower figure if due diligence finds problems or results slip. This is called retrading. Clean records disclosed early, steady results during the sale and backup buyers who remain interested are the best protection against it.

What does exclusivity in an LOI mean for me?

It means you agree not to negotiate with other buyers for a set period while this buyer completes due diligence. Keep the period as short as is realistic, and make sure the LOI is detailed enough on price and terms that granting exclusivity is worth it.