How to Close a Deal Under LOI in 2026: The 10% Club
by Raises.com
This article is general information, not legal, tax, securities or investment advice. Laws, rates and programs change, and the details here may no longer be current. Confirm anything you plan to act on with your own counsel and accountant.
Most deals that reach a signed letter of intent never close, and the ones that do were won by work finished before signing. Cody Sechelski closed the first acquisition of his Texas HVAC roll-up with Raises.com® advising on the capital. He is blunt that the large majority of deals under LOI die. His case study calls the survivors the 10% club. Five things kill a deal after the LOI.
Signing the LOI starts a clock. You get exclusivity and a diligence window, and the seller now expects you to perform. Cody found Raises.com® through a YouTube interview in October 2025, booked a call the same month, and closed roughly seven months later with an equity-light structure and seller participation. Budget for months. A buyer who plans for weeks burns the exclusivity window first.
1. Financing that was never real
The first killer is a lender's interest read as a commitment. A buyer signs the LOI on the strength of one friendly conversation. Then the conversation becomes a term sheet, the term sheet goes to credit committee, and credit committee asks for more equity or a lower price. Cody's capital did not come from the first door. It came from a funding tournament across multiple capital firms, through months of moving goalposts. The final lender quoted three weeks and took two.
Run lenders in parallel. Send the same package to several of them in the week you sign, so a no from one costs you days instead of your exclusivity. Every lender should know it is competing for the file.
2. Financials that disagree with each other
Lenders read three documents side by side: tax returns, the monthly P&L and bank deposits. When the three tell different stories, the deal stops while someone explains the gap, and an unexplained gap reads as sloppy books or as cash nobody reported. Cody's first marker of a closing deal: clean financials that agree with each other. Owners of family-run companies often run personal costs through the business. That can be fine. It still has to be reconciled in writing before the lender finds it.
Dave Klivans of ag.online came to Raises.com® juggling several real estate deals and a patchwork of disconnected investor sources. The team put his holdings into one data room and built a model across his personal and business entities to show the debt service coverage figures his lenders required. One data room, one set of numbers. Get there before an outsider opens the file.
3. A business that fails the key-man test
Start with what walks out the door with the seller. Ask who holds the customer relationships, who prices the jobs, and whose name is on the license the work runs under. In a trades company the honest answer is often one person. Then the lender is lending against someone about to leave. Cody lists a business that survives the key-man test as the second marker of a deal that closes.
You fix this in the structure. Seller participation keeps the owner tied to the result after the wire, because a seller note or rolled equity only pays out if the business keeps running after the handover. Cody's close used exactly that. Add a written transition period with named duties and dates, and the key-man risk becomes a schedule instead of a guess.
4. A seller who was never going to sign
Some sellers sign an LOI just to test the price. They slow-walk the data request, reopen the price after diligence, or cannot say what they will do the day after closing. None of that shows in the LOI itself. Ask two questions before you sign: why are you selling, and what does your next year look like?
A seller with real answers can wait through a slow lender. Cody's seller waited through months of moving goalposts because the structure and the story held. A seller keeps waiting when the deal still makes sense every time they reread it, so give them a structure they can explain to their accountant in one sentence. Complexity reads as risk to a seller.
5. A buyer who stops moving
Deals rarely die in one dramatic moment. They die when a lender asks a question on Tuesday and the answer goes out the following Friday, three times in a row. Cody's third marker is a team that keeps moving when the process drags. On his deal, one advisor ran the process day to day. The file always had an owner.
Speed is a decision habit. Arch Capital (Abdiel Louis) used rapid deal analysis from Raises.com® to make faster decisions on time-sensitive projects. A buyer who needs two weeks to answer a lender's restructuring question hands that lender a reason to move on to the next file in the stack. Decide fast, write it down, send it.
The five killers side by side
| Killer | What it looks like after the LOI | The preparation that beats it |
|---|---|---|
| Financing that was never real | One lender, one term sheet, a request for more equity at credit committee | Several lenders reading the same package from the week you sign |
| Financials that disagree | Tax returns, P&L and bank deposits tell three different stories | A written reconciliation and one data room |
| Key-man business | The owner holds the customers, the pricing or the license | Seller participation and a written transition with named duties |
| A seller who will not sign | A slow data request, a reopened price, no plan for the day after | Two questions before the LOI and a structure the seller can explain |
| A buyer who stops moving | Lender questions answered a week late | One owner of the file and decisions made in a day |
Frequently asked questions
How long does it take to close a deal after the LOI is signed?
Plan in months. Cody Sechelski went from his first call with Raises.com® in October 2025 to a closed acquisition roughly seven months later, and his lender search alone ran through months of moving goalposts. Build your exclusivity period around a timeline like that. Asking for more time later costs you standing with the seller.
Is a letter of intent legally binding?
Mostly no. In most LOIs the price and deal terms are non-binding, while the exclusivity and confidentiality clauses are written to bind. Read those clauses before you sign, because the exclusivity window is the clock every killer above runs against.
Should I line up financing before I sign an LOI?
Yes, far enough that lenders can read your file the week you sign. A seller will not wait for a search that starts from zero. Have the package built and the financials reconciled. Keep a short list of lenders who finance your kind of deal.
What does seller participation mean in an acquisition?
Seller participation means the seller keeps money in the deal after closing, through a seller note, rolled equity or both. It cuts the cash you raise for the wire. Cody frames rollover equity as the second payday, because the stake a seller rolls can pay again as the platform grows.
Can I still close if my first lender says no?
Yes, if the package was built to go to more than one lender. Cody's capital came from a tournament across several firms. A no is cheap when other lenders already have the file.
Raises.com® builds the structure behind the close, so the raise is legally and financially sound before a lender or an investor opens the file. That means the PPM, the subscription and operating agreements, CFA financial proformas and the data room. See how acquisition capital gets structured at https://raises.com/buy-a-business, or book a strategy call at https://raises.com/call.
General information, not legal, tax, securities or investment advice. Laws, rates and programs change, and the details here may no longer be current. Confirm anything you plan to act on with your own counsel and accountant.