Blog · Published 2026-10-18
LOI to close: the diligence timeline for a small acquisition, phase by phase.
Between a signed LOI and closing, a small acquisition moves through confirmatory diligence, lender underwriting, documentation and closing conditions, many of them in parallel. We give the order and what holds each phase up, not a number of days: duration depends on the exclusivity period you negotiate, your lender and the seller's responsiveness.
The phases
| Phase | What happens | What usually holds it up |
|---|---|---|
| Signed LOI | Price and terms are agreed in principle, usually with a period in which the seller deals only with you. Its length is negotiated. | Open points left in the LOI that become fights later. |
| Confirmatory diligence | Your accountant, lawyer and you test the claims in the CIM against records the seller provides. | Documents that arrive late, or not at all; contradictions that need explaining. |
| Lender underwriting | The lender reviews the business and your plan. For certain SBA 7(a) deals from 1 October 2026 this includes an independent quality of earnings analysis engaged on behalf of the lender; AAFCPAs notes it takes time, needs detailed financial information and can add coordination earlier in the process (summary). | Missing year-end statements, an add-back the provider cannot support. |
| Documentation | The purchase agreement and related documents are drafted and negotiated. | Findings from diligence that reopen price or terms. |
| Closing conditions | Third-party consents, license transfers and other conditions are satisfied. | A contract that cannot be assigned, a license held by the owner personally. |
| Closing | Funds and ownership move. | Any earlier item still open. |
What to do before the LOI to shorten the rest
- Run the first-pass checks on the CIM, financials and tax return, so contradictions are known before you sign. The sample brief's list of items to confirm before LOI is an example.
- Check the data room holds what underwriting needs; the data room checklist lists it, and for SBA deals see the quality of earnings requirements.
- Ask your lender in advance for its document list and its timeline for your type of deal.
- Put the open items into the LOI instead of leaving them for later.
What software changes and what it does not
Software reads documents faster than a person can, so the contradictions and gaps reach you earlier. It does not shorten the lender's process, the provider's work, or the seller's response time. See the sandbox for a brief on a synthetic deal.
Worked example from the sample brief
The pre-LOI list from the sample brief (a synthetic deal), quoted from its "What to confirm before LOI" section:
- Item 1. Assignment clauses across the top-ten contracts.
- Item 2. Tested data export from the legacy operating system.
- Item 3. 3-year revenue-by-customer and staff turnover.
- Item 4. 10-year litigation history.
The example is Sentinel Fire & Safety, Inc., a synthetic company built to show the product. Nothing in it describes a real business, and the same output shape applies to a real data room. See the whole thing at /sample-brief.
See it on a deal.
Open a real brief on a synthetic deal without an account, or check how a single deal is priced.
