The Four Essential Stages of Making an Offer and Closing on Your Acquisition

When buying a firm and reaching a timely and successful closing, there are four important stages to keep in mind. In this article, we will take a look at the process and what can expect. ( NOTE Accounting Practice Sellers > if you are planning to sell your firm, it is also helpful to understand in depth what the stages are from a buyer’s perspective. )

1) The Letter of Intent (LOI)

The letter of intent is one of the responsibilities that your business broker or M&A advisor will take on to assist you. Your letter of intent should include the price, terms, time frame anticipated as well as other factors, such as the seller’s transition and training. Details such as what is included and what is not included in the deal should always be addressed in this agreement. 

2) Due Diligence 

The due diligence process is also an essential step. Your business broker or M&A advisor will guide you during due diligence. All important facts and documentation should be evaluated, ranging from tax returns and internal P&Ls to leases, bank statements, and customer/employee lists.  In this stage Buyers should invest enough time and energy into reviewing sample client files, learning about the firm’s software platforms and understanding the roles of any existing staff in the firm. Be sure to take your time with this stage. 

There are other areas of due diligence that should not be overlooked including the very important NDA, financial statements, credit reports and other factors. If you want to have a smooth closing (which clearly you do!), you will want to wisely invest your time in due diligence.

3) Financing Approval 

Financing approval is considered you and your lender’s responsibility. However, if you need advice and insights, your business broker or M&A advisor should be able to assist you. ABA Advisors can also refer you to one or more national SBA and conventional lenders who understand accounting practice acquisition (cash flow based) loans vs local banks who only understand hard asset-based loans and may ultimately waste your time trying to fit a square peg (your target accounting practice) into a round hole (their hard asset-based credit model).

To help you get started on your financing, click the link below and choose the FINANCING option under the I am interested section:

4) Purchase Agreement Drafting

The final purchase agreement drafting period must be taken seriously. This is a step where an attorney will be of tremendous assistance. Your written agreement should cover a wide range of aspects including everything from payment terms to any physical assets like furniture and equipment you may be buying from the seller. Both you the buyer and the seller should know exactly what these financial arrangements will be. 

When these four stages are followed properly, your deal should close in a timely and effective manner. If you have any concerns or uncertainties about these parts of a closing, be sure to always ask the necessary questions. 

Copyright: Business Brokerage Press, Inc.

Natee Meeplan/

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