Deal Templates for
Small Business Acquisitions

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An LOI should cover the purchase price, how you're paying (cash, seller note, SBA loan), the deal structure (asset sale vs. stock sale), an exclusivity period so the seller stops talking to other buyers, conditions to closing, a non-compete clause, and transition services from the seller. Our LOI templates include all of these sections with guidance on what to fill in. The LOI is non-binding except for exclusivity and confidentiality, so don't overthink it. Get the key terms on paper and move to diligence.

In an asset sale, you buy the company's assets (equipment, inventory, contracts, goodwill) but not the legal entity itself. The seller keeps the company and its historical liabilities. In a stock sale (or equity purchase), you buy the company's shares outright, which means you inherit everything, including liabilities. Most small business acquisitions are structured as asset sales because they're cleaner for the buyer. SBA lenders often prefer them too. Our LOI template comes in both versions so you can choose the right structure for your deal.

Our due diligence checklist covers 60+ items across 10 categories: general business information, financial and accounting records, operational and commercial data, property and assets, IT systems, employee and HR records, indebtedness and liabilities, tax filings, insurance policies, and legal matters. Key items include three years of monthly financial statements, customer concentration analysis, accounts receivable aging, vendor contracts, and employee agreements. Start with financials and work outward.

A quality of earnings analysis is a financial deep-dive that verifies the seller's reported earnings are real and repeatable. It looks at whether revenue is recurring or one-time, whether expenses are normalized, and whether EBITDA add-backs are legitimate. Think of it as an audit focused on "would this business keep making this much money under new ownership?" Most buyers commissioning a QoE will give their provider direct access to the seller's accounting software rather than requesting exports manually. Our partner network includes QoE providers who work with Rejigg buyers.

Start with the business's adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) after add-backs. Apply a multiple, typically 2.5x to 4.5x for small businesses depending on size, industry, and growth. Then model the financing: SBA 7(a) loans cover up to $5M with 10-year terms, and lenders want to see a debt service coverage ratio (DSCR) above 1.25x. Our SBA valuation model runs all of this, including a seller note on standby and 5-year projections. Or try our free valuation calculator for a quick estimate.

A seller note is financing from the seller, where the seller agrees to receive part of the purchase price over time instead of all cash at closing. In a typical deal, the seller note is subordinated to the SBA loan, meaning the bank gets paid first. SBA lenders usually require the seller note to be on "full standby" for 24 months, meaning no cash payments during that period (interest still accrues). After standby, the note amortizes over 2-5 years with monthly payments. Seller notes typically represent 5-15% of the purchase price and signal to lenders that the seller has confidence in the business.

An exclusivity period (sometimes called a "no-shop clause") is the window after signing an LOI where the seller agrees not to negotiate with other buyers. Our LOI templates use a 90-day exclusivity period that auto-extends in 30-day increments unless either party opts out. During exclusivity, you complete due diligence and negotiate the definitive purchase agreement. If the seller receives another offer during exclusivity, they're required to tell you about it. This is one of the few binding provisions in an otherwise non-binding LOI.

A flow of funds maps exactly where every dollar goes on closing day. It tracks incoming wires (your equity, the bank's loan proceeds, any investor capital) and outgoing wires (seller proceeds, debt payoffs, escrow deposits, legal fees, transaction expenses). It also handles the net working capital adjustment, where you compare the estimated working capital at closing to the target, then true up after the deal closes. One important detail: always verify wire instructions by phone using a known number before sending funds. Wire fraud at closing is a real and common risk.

Focus on four areas: why they're selling (and when they want to close), how the business makes money (revenue model, customer mix, recurring vs. project-based), what the owner actually does day-to-day (this tells you what you're buying into), and what the competitive landscape looks like. Don't lead with valuation or price on the first call. You're trying to figure out if this is a business you want to own. Our seller interview template walks through each question with notes on what to listen for and follow-up prompts. Browse businesses on Rejigg to start conversations directly.

We recommend it. These templates are built from real deal experience, but every deal is different. An attorney can adapt the language to your specific situation and your state's laws. Our partner network includes M&A attorneys who work with Rejigg buyers.

Yes. They're yours to use on any deal, with any platform, with any counterparty. We publish them because good templates help buyers move faster, and faster buyers are better for everyone.

Rejigg is a platform for buying small businesses directly from owners. We source businesses off-market, verify financials, and give you tools to manage the deal from first contact through closing. Buyers pay a success fee at closing. Sellers list free.

Brokers represent the seller and charge 5-10% of the sale price. Marketplaces list whatever gets posted. We individually source and vet every business, then connect you directly with the owner. No middleman, no gatekeeping, and you get tools to manage the whole process. Browse businesses.

A valuation calculator that uses real transaction data, an SBA loan calculator for modeling financing, a built-in data room for diligence, and a partner network of lenders, QoE providers, and M&A attorneys. All accessible from your free account.