From first conversation to signed agreement.

This guide explains how we negotiate and structure acquisitions. It is written for business owners who have never sold a company and want to understand the process before committing to it.

This guide reflects our standard approach; every deal has specific facts that change the details. Have your attorney and accountant review any actual transaction. This is not legal or financial advice.

Why We Wrote This

Most buyers keep their deal process opaque — because opacity benefits the buyer. We would rather you understand exactly what you are agreeing to before you agree to it, because a deal built on confusion does not hold together, and a seller who feels misled does not carry a note comfortably.

Read this before calling us if you want. Bring it to your accountant. Mark it up. Ask us about anything that is unclear.

1. Preliminary Conversation — No Documents, No Commitment

The first step is a phone call with no documents and no commitment. No financial information changes hands at this stage. We describe what we do, we ask about your business, and we both decide whether a further conversation is worth having.

Nothing said in this call is binding or confidential without a signed agreement in place. Do not share specific financial details until the NDA is signed.

2. Mutual NDA — Protecting Both Sides Before Anything Else

Before any financial information changes hands, both parties sign a mutual NDA. Mutual means it protects you as well as us. We provide it. You should have your attorney review it before signing. It covers what counts as confidential information, how long the obligation lasts, what happens if either party breaches it, and what is excluded.

We do not ask you to sign a non-compete or a no-shop agreement at this stage. You are not agreeing to sell. You are agreeing to have a protected conversation.

3. Financial Review — We Do the Work, You Provide the Documents

Once the NDA is signed, we ask for financial records. The standard package is three years of tax returns, three years of profit and loss statements, balance sheets, and a brief description of customer concentration, employee count, and any major contracts.

We look at what the business actually earns — what the owner's compensation and discretionary expenses look like, and whether the numbers are consistent year over year. This review typically takes one to three weeks depending on the completeness of the records.

4. Internal Investment Review — Before Any Offer Is Made

Before we issue any offer, we complete an internal investment review. We build a financial model based on the records provided. We run a preliminary check against our six hard decision criteria: debt service coverage ratio, customer concentration, leverage ratio, post-debt free cash flow, liquidity reserve, and the feasibility of placing a qualified general manager. We stress-test the preliminary numbers.

If the deal does not meet our criteria at this stage, we say so directly. We tell you why, and we do not string the process along.

5. Indication of Interest — Our First Number, in Writing

If the financial review and internal review both support a deal, we send a written indication of interest. This is not a binding offer. It states our preliminary valuation range, the general deal structure we are considering — the approximate price, proposed structure, general note terms — and the key conditions to be satisfied before a formal offer.

You are not bound by receiving this document. You can walk away, take it to your accountant, or come back with a different number and explain why.

6. Valuation Discussion — Where Both Numbers Live

Most sellers have a number in mind; we have a number based on the financial review. These are rarely the same at the start. Our number is based on the business's free cash flow — what the business generates after operating costs and a realistic owner's salary. We apply a multiple based on size, stability, customer concentration, and sector. For the businesses we acquire, the purchase price range is $1.5 million to $15 million, and the implied EBITDA multiple typically falls between 3x and 5x.

The valuation discussion should end with a number both sides can defend. If we cannot get there, there is no deal — and that is a legitimate outcome.

7. Letter of Intent — The First Binding Commitments

Once aligned on value and general structure, we sign a letter of intent. The LOI sets out the agreed terms at a level of specificity sufficient to guide the drafting of final documents: purchase price, note terms, transaction structure, conditions to closing, exclusivity period, and timeline.

Most of the LOI is not binding — price and structure can still change if due diligence reveals something material. What is binding: the exclusivity clause, the confidentiality provisions, and certain expense terms.

A note on exclusivity: it is a reasonable request from a buyer about to spend significant time and money on diligence. It is equally reasonable for you to ask for a shorter exclusivity period or for protection if we walk away for reasons other than a material finding. Have your attorney negotiate this carefully.

8. Due Diligence — The Full Review, Done Honestly

Due diligence is our thorough review of everything the business is and owns before we commit to a final price and close. It covers four areas.

Financial due diligence verifies that the numbers you provided are accurate. We engage a licensed accountant experienced in lower-middle-market acquisitions to conduct a quality of earnings review. This review reconciles your tax returns to financial statements, reviews accounts receivable aging, examines add-backs, and produces a verified normalized EBITDA figure. Our preliminary financial model is updated with confirmed numbers, not seller-reported estimates.

Legal due diligence reviews contracts, leases, permits, licenses, intellectual property, litigation history, and corporate formation documents. We are looking for anything that creates an undisclosed liability, restricts the transfer of the business, or requires third-party consent to the sale.

Operational due diligence is our attempt to understand how the business actually works — its customers, suppliers, key employees, production processes, and physical assets. This is where domain knowledge matters: we are evaluating the operation, not just reading a description of it.

Regulatory due diligence applies where the business operates in a sector with specific compliance obligations — quality certifications in surface treatment, food safety programs in specialty food, licensing in staffing, environmental permits in minerals processing. We review these carefully because a compliance gap that surfaces after closing is far more expensive to fix than one addressed during negotiation.

Due diligence takes four to twelve weeks depending on complexity. We will not use minor findings to renegotiate the price. We will use material findings to have an honest conversation about whether and how they affect the deal.

9. General Manager Assessment

Before the deal closes, we identify and assess the general manager who will run the business. This is a sequential step, not a concurrent one — we complete it before we can close. We assess candidates against a structured rubric covering relevant sector experience, financial management history, leadership track record, and demonstrated ability to manage without daily oversight. A candidate who does not meet our minimum standard disqualifies the deal at that stage, not after.

If you are staying on in a transition capacity, the GM is in place before that transition period ends. You are not handing the keys to a vacant operation. You are handing them to a professional who has been evaluated, hired, and oriented before you leave.

10. Representations and Warranties — What You Are Certifying Is True

In the final purchase agreement, both parties make formal representations about what is true at closing. As the seller, you will represent that the financial statements are accurate, all material contracts are disclosed, there is no pending undisclosed litigation, the business owns or has rights to its intellectual property, and there are no undisclosed liabilities.

The negotiation around representations involves wording, qualifiers, and survival periods. Standard seller-friendly positions include shorter survival periods, knowledge qualifiers, caps on indemnification liability, and minimum thresholds before a claim can be made. We do not ask for representations broader than what we need to understand what we are buying.

11. The Seller Note — The Core of the Deal Structure

The seller note is a legally binding promissory note from Superposition Investments to the seller. It contains the principal amount, the annual interest rate, the payment schedule, the maturity date, the security interest (recorded by UCC filing before close), the prepayment conditions, the events of default, the remedies available to the seller if the buyer defaults, and the financial reporting obligation requiring us to notify you when debt service coverage falls below defined thresholds.

We negotiate note terms transparently. We will not propose terms we cannot explain or that we would not agree to if the positions were reversed.

12. Working Capital Adjustment — Getting the Baseline Right

At closing, most acquisitions include a working capital adjustment. The purchase price is set assuming the business delivers a normal level of working capital at close. If the business delivers more than the agreed baseline, the seller receives more; if less, the price adjusts downward. The methodology should be agreed and clearly written before close — disputes about working capital are among the most common post-close conflicts in lower-middle-market transactions.

13. Transition Agreement — What Happens After Close

If the seller stays on in any capacity after closing, those terms are documented in a separate agreement. This covers the seller's role, duration, compensation, what decisions require their involvement, and the conditions under which either party can end the arrangement. We do not leave this informal.

14. Closing — Documents, Signatures, and Transfer

Closing is the simultaneous exchange of documents and consideration. The buyer delivers whatever cash component was agreed; the seller delivers the business — its assets, contracts, records, and keys. Both parties sign the final documents: the purchase agreement, the seller note, the security agreement, the transition agreement, any required third-party consents, and any intellectual property assignments.

After closing, the business continues to operate. Employees show up to work. Customers continue to be served. The general manager is in place.

What We Do Not Do

Three things are non-negotiable, regardless of how a deal is structured.

We do not renegotiate the price based on previously disclosed findings. If you told us about a customer concentration issue in the first conversation, we will not use that issue to reduce the price three months later.

We do not propose terms we cannot explain. Every provision in our documents has a purpose. If you ask why something is in there, we will tell you.

We do not close a deal we are not prepared to operate. If due diligence reveals we are not capable of operating a particular business, we will say so — because a buyer who cannot run the business is worse for the seller than no buyer at all.

A Note on Advisors

Have your attorney and accountant involved in any business sale. This guide is plain-language context, not a substitute for professional advice. If you do not have a transaction attorney and would like a referral, ask us. We will provide names without any financial relationship to the referral.