The 60 Days After the LOI Are a Finance Sprint

Most owners think of a letter of intent as the hard part being over. Price agreed, buyer committed, paperwork to follow. What actually happens next is a sixty to ninety day sprint, and a surprising amount of it runs through your accounting function.

The lawyers get the headlines during this stretch. The purchase agreement, the schedules, the closing conditions. But underneath almost every one of those documents is a number that has to come from somewhere, and that somewhere is your books. If your financial records are clean and current, this period is busy. If they are not, this is where the deal starts to bleed value.

The buyer is now testing your numbers, not your story

Before the LOI, a buyer is evaluating a narrative supported by financials. After the LOI, they are verifying financials and treating the narrative as secondary. Their diligence team and often a quality of earnings provider will pull your general ledger, tie your reported earnings back to your tax returns, test your revenue cutoff, and rebuild your adjusted EBITDA from source data rather than from your summary.

That shift matters because you are now inside an exclusivity period. You have agreed not to talk to other buyers, which means the competitive tension that got you a good price is gone. If verification turns up a problem, you no longer have an alternative buyer to walk toward. A discrepancy that would have cost you nothing three months earlier now costs you real money, because the only thing left to negotiate is a lower price.

Almost every one of those discrepancies is preventable. Books closed monthly on an accrual basis, reconciled, and tying to filed returns rarely produce surprises. Books assembled after the fact almost always do.

The purchase agreement is more of a finance document than owners expect

Read a purchase agreement with an accounting eye and you will see how much of it depends on your records:

• The price adjusts. The working capital target, how it is calculated, and the true-up that follows closing all come straight off your balance sheet.
• You make factual promises about your financial statements, your taxes, your liabilities, and your contracts. Those are representations, and they are backed by an escrow that holds part of your money for a year or more.
• The disclosure schedules attached to the agreement are essentially an inventory of your business: every material contract, every lien, every employee arrangement, every related party transaction.
• You agree to keep operating normally until closing, and the buyer will want to see monthly financials that prove you did.

None of that is legal work you can hand off entirely. It is finance work with a legal wrapper, and the person who has to produce it is you or whoever keeps your books.

Disclosure schedules are where clean records pay off fastest

The schedules are the most underestimated task in a sale. They require pulling together every contract you have signed, every obligation you carry, and every arrangement that might matter to a buyer, then listing them accurately.

Do it well and it is genuinely protective. Anything you disclose accurately cannot later be claimed as a breach of your representations. Disclosed problems belong to the buyer. Undisclosed ones come out of your escrow.

The difference in effort is stark. An owner with organized records, a current contract file, and a real month-end close finishes schedules in days. An owner reconstructing three years of paperwork from email and filing cabinets spends weeks, and every one of those weeks is a week the deal is not closing while momentum quietly drains away.

You still have to run the business, and the numbers still get watched

Here is the trap. Diligence is consuming, and it lands entirely on the owner and the finance function at the same time the buyer is watching monthly results for any sign of softness. A weak month under contract invites questions. Two weak months invite a repriced offer.

Owners who get through this stretch cleanly usually have one thing in common: someone other than the owner is handling the financial workload. Monthly closes keep happening on schedule. Diligence requests get answered in days rather than weeks. The owner stays focused on customers and operations, which is the only thing that keeps the numbers where the buyer expects them.

That is not a luxury. Slow, disorganized responses read as risk, and buyers price risk.

The work belongs before the LOI, not after

Everything described here is easier and cheaper when it is done in advance. Clean accrual financials with a real monthly close. Add-backs documented as they occur rather than reconstructed later. A contract file that is actually current. A data room built before a buyer asks for one.

Owners who prepare a year or two ahead go into this stretch with the answers already assembled. Owners who wait until the LOI is signed spend the most leveraged period of their business life doing catch-up bookkeeping under a deadline, with no other buyer at the table. The price they end up with reflects that.

If you want to understand the deal mechanics themselves, our colleagues at Texas Exit Advisors walk owners through what an LOI commits you to and what comes after. The financial readiness underneath it is what we handle: a clean monthly close, documented add-backs, and reporting that holds up when a buyer's diligence team goes looking.

This is general information, not legal or tax advice. Work with an M&A attorney and a transaction CPA on any purchase agreement before you sign.

If you are eighteen months from a sale, or just want to know whether your books would survive the look, that is a good conversation to have now rather than during exclusivity.