Why smaller deals run into trouble
In a small or mid-sized company, the owner often is the business: customer relationships, supplier terms, and much of the know-how live with one or two people. That makes the transition plan as important as the price. Buyers commonly propose paying part of the price through seller financing or an earnout tied to future performance, which keeps the seller's money at risk after closing. Financial records may not have been prepared with a buyer in mind, so diligence can surface tax, payroll, or licensing issues that never mattered in daily operations. If the buyer is borrowing, its lender will usually impose requirements of its own on the deal documents.
Structure, consents, and paperwork
Much of the early negotiation in SME M&A concerns whether the buyer acquires the company's assets or its ownership interests. Asset deals let buyers choose what they take on but may need consents to assign leases, customer contracts, and permits, while equity deals keep those arrangements in place and carry the company's history along with them. The seller's tax result can differ sharply between the two, so the seller's accountant should be involved early. Pull together the operating agreement or bylaws, the ownership records, key contracts, the lease, and any loans or liens. In New York, sales tax notice rules can affect buyers of business assets, which is easy to miss in a small deal.
Decisions an owner makes before the letter of intent
Before signing a letter of intent, decide what you will accept on non-compete scope, your role after closing, and what happens to your employees. Letters of intent are usually non-binding on price but often bind the parties on exclusivity and confidentiality, which limits your ability to talk with other buyers. A buyer should decide early how much diligence the budget allows and which risks it would rather cover through indemnity or escrow. Our starting point is the proposed term sheet, from which we flag the items that typically cause delay and set a realistic sequence toward closing.
