Managing a Company While Closing a Deal

The months between LOI and closing require managing two parallel businesses: running operations AND negotiating the sale. Performance drop-off during this period kills deals.

The Second Job of Selling a Business

From LOI to closing typically spans 60-120 days. During this period, you maintain CEO responsibilities while also serving as seller. Time commitment: 15-25 hours weekly for sale-related activities (buyer diligence requests, negotiation, legal review). Meanwhile operational demands don't decrease. Sales team still needs coaching. Financial close still happens monthly. Customers still need relationship management. This dual role exhaustion is real. Many sellers stop running the business effectively precisely when business performance matters most. Buyer's due diligence verifies recent financial performance. If Q3 EBITDA dropped 15% compared to Q1-Q2 because management was distracted, buyer either reduces offer or walks away. Solution: Delegate operational authority. Establish clear decision-making protocols where managers can make decisions without weekly approval meetings.

How to Delegate Oversight During Negotiations

Pre-LOI: Identify your strongest operational executive (likely COO, Operations Manager, or senior department head). This person becomes 'Operating Lead' - responsible for all operational decisions during sale process. Create decision matrix showing: what decisions require your approval (major customer changes, significant expenses), what decisions Operating Lead can make independently (hiring, operational improvements, routine purchases). Empower this person. Weekly operational check-ins (30-45 minutes) replace daily management. Frame as 'I'm focusing on this strategic transaction; I need you running operations with full autonomy.' Most managers rise to the occasion. Some may worry about job security post-acquisition. Provide clarity: 'Your performance during this period demonstrates capabilities buyer wants in expanded role.' Buyer often meets the Operating Lead and evaluates them for post-close management roles. Strong performance increases purchase confidence.

Maintaining Performance to Prevent Price Re-Negotiation

Buyer performs financial due diligence continuously from LOI to closing. Each week, they review updated financial results. If TTM falls below Letter of Intent baseline, they invoke MAC (Material Adverse Change) clause and attempt price reduction. Example: LOI assumes $3.5M TTM revenue. By closing date, most recent month shows $2.8M, indicating decline. Buyer claims business fundamentally changed and reduces offer 10-15%. Prevention: maintain or grow revenue through closing. This requires operational discipline. Maintain quality (no shortcuts that damage reputation). Maintain customer communication (no service gaps). Maintain employee focus (no mass departures that compromise capability). Real example: Software company showed strong Q1-Q3 but Q4 was weak (common in tech sales cycles). Buyer recognized this as pattern and not material adverse change. But if Q4 suddenly dropped 30% below normal? That triggers MAC discussions and price renegotiation demands.

Setting Boundaries with Potential Buyers

Buyer due diligence demands can become excessive. 'Can we interview all 10 senior managers?' (yes, but schedule it one meeting across two days, not ten separate meetings). 'Can we observe sales team meetings?' (specific meetings with non-customer-sensitive content, not all meetings). 'Can we contact your top 10 customers?' (you reach out first, then buyer calls with your introduction). Set boundaries that protect operational continuity. Excessive buyer diligence (endless detailed requests) sometimes indicates buyer uncertainty or due diligence coordinator incompetence. Push back professionally: 'We want full transparency but need to maintain operations. Here's what we can provide on this timeline.' Most professional buyers respect boundaries. Some try to extract maximum leverage through exhausting due diligence. Recognize this and discuss with your broker/attorney.