Small business M&A sounds like something that happens in glass towers. In reality, most business acquisitions involve a founder, a buyer, a couple of attorneys, an accountant or two, a lender and a lot of paperwork. The steps are surprisingly consistent. Here they are, with what each side should be thinking at each stage.
1. The first conversation
A buyer and seller meet — through a broker, a listing, a referral from an accountant, or a direct letter or call. Early conversations are about fit: what the business does, why the owner might sell, what the buyer is looking for, and timing.
Seller: you don’t owe anyone your numbers yet. Buyer: listen more than you talk. Owners sell to people they trust.
2. Confidentiality and first numbers
Before sharing financials, the parties sign a non-disclosure agreement. The seller shares summary financials, often a few years of tax returns and profit-and-loss statements, and sometimes a written overview of the business. See selling a business confidentially.
3. Valuation
The buyer forms a view of value based on earnings, risk and transferability. The seller should already have one, built on realistic numbers rather than hope. See how to value a small business.
4. The letter of intent
The buyer makes a written offer — a letter of intent, or LOI — covering price, structure, financing, transition, key conditions and an exclusivity period. Most terms are non-binding; a few, like confidentiality and exclusivity, usually are. See letter of intent to buy a business.
5. Due diligence
The buyer verifies everything: financials, taxes, contracts, customers, employees, equipment, licenses, legal matters. This is where many deals change — or die. See due diligence checklist.
6. Financing
Most small business purchases use some combination of buyer cash, a bank or SBA loan, and seller financing. The lender does its own underwriting in parallel with diligence. See how to finance a business acquisition.
7. The definitive agreement
Attorneys draft the purchase agreement: price and adjustments, what’s included, representations and warranties, indemnification, escrows, non-compete, transition and closing conditions. See business purchase agreement.
8. Closing
Documents are signed, funds move, keys and passwords change hands, and filings and notifications begin.
9. Transition
The seller helps the buyer take over relationships, processes and knowledge for an agreed period. This stage determines whether the buyer keeps what they paid for. See post-acquisition integration.
What each side should prepare
| Seller | Buyer |
|---|---|
| Clean books that tie to tax returns | A clear buy box and proof of funds or financing path |
| A list of what depends on you personally | An attorney and CPA who do deals |
| Contracts, leases and licenses organized | A diligence checklist and timeline |
| A realistic view of value | An operating plan for after closing |
How I approach it
When I look at a business, I’m thinking about the same thing at every stage: can this business run well without its founder, and what would I need to install to make that true? That’s an operator’s lens, and it shapes the questions I ask and the plan I’d bring. If you’re an owner curious how a buyer like me would see your business, start a confidential conversation.
Questions people ask
How long does it take to buy or sell a small business?
It varies widely. Preparing a business for sale can take a year or more; once a buyer and seller agree on a letter of intent, diligence, financing and documents commonly take a few months. Bank and SBA financing, landlord consents and licensing can stretch the timeline.
Who is involved in a small business acquisition?
Usually the buyer and seller, each side’s attorney and CPA, a lender if there’s financing, sometimes a business broker or M&A advisor, a landlord for lease assignments, and specialists such as a quality-of-earnings provider or appraiser.