LOI to Wire: The 12-Step Acquisition Closing System (2026)
by Raises.com
The period between a signed letter of intent and a funded wire is where most acquisitions fail, and it fails for reasons that are known in advance: the equity gap was calculated after the LOI rather than before it, financing was run sequentially instead of in parallel, and the numbers stopped agreeing with each other across the model, the lender summary and the legal documents. This is the twelve-step system Raises.com uses to move a business or real estate acquisition from LOI to wire, with the first fourteen days broken out day by day.
A signed LOI feels like progress. Operationally it starts the most dangerous part of the transaction. The seller begins counting days. Lenders begin looking for reasons to decline. Investors begin testing assumptions. Save this page, send it to your deal team, and work it as a checklist.
1. Define your financing box before you negotiate price
Calculate these five numbers before you submit an LOI, not after:
- Maximum senior debt supported by cash flow
- Maximum senior debt allowed by collateral
- Cash required at closing
- Minimum operating reserve after closing
- The remaining equity gap
The equation:
Equity gap = total uses − senior debt − seller financing − assumed debt − rollover equity − mezzanine or preferred equity
Total uses is more than the purchase price. It includes transaction fees, legal and accounting costs, financing fees, working capital, renovation or integration costs, taxes and closing adjustments, and a contingency reserve. Most buyers discover their real equity requirement after signing, when the seller already controls the clock.
2. Write the investment memo before the LOI
One page, seven questions:
- What are we buying?
- Why is the seller selling?
- Why are we the right buyer?
- How does the asset produce cash?
- Where does the purchase capital come from?
- What could cause the deal to fail?
- What is our response if the base case breaks?
If you cannot explain the deal on one page, a lender will struggle to present it to a credit committee and an investor will struggle to repeat it to a partner.
3. Build three versions of the capital stack
| Case | What you model | What it proves |
|---|---|---|
| Base | The seller's normalized performance, with adjustments you can document | The deal works as presented |
| Downside | Revenue falls 10%, gross margin contracts, interest expense rises, closing takes longer, working capital needs increase, one large customer leaves | The deal survives one thing going wrong |
| Severe downside | Several of the above at once | Whether the structure itself needs to change |
For each case, calculate debt-service coverage, cash remaining after debt payments, break-even revenue, months of liquidity, investor distributions, sponsor compensation, and additional capital required. If the transaction only survives when every assumption works, the structure is the problem, not the model.
4. Use the capital stack to negotiate the purchase
Price is one term. Structure decides whether you can close. Each layer should solve a specific problem:
| Layer | The problem it solves |
|---|---|
| Senior debt | The cheapest capital, sized on cash flow and collateral |
| Seller financing | Reduces cash required at closing |
| Assumed debt | Keeps existing terms in place where they are favourable |
| Earnout | Bridges a disagreement about future performance |
| Seller rollover equity | Keeps the seller aligned after closing |
| Preferred equity | Fills the gap without immediately giving away common ownership |
| Mezzanine debt | Sits between senior debt and equity when senior leverage caps out |
| Common equity and sponsor capital | The residual risk, and the alignment lenders look for |
Show each party exactly where they sit, when they are paid, and what protects them.
5. Run financing as a tournament, not a queue
Approaching lenders one at a time hands each of them control of your timeline. Send the same core package to several qualified sources in parallel and track date contacted, initial response, documents requested, indicative terms, credit concerns, decision maker, next action, expected decision date, and reason for decline.
Ask this on the first call with every lender:
"Based on what you have seen, what are the three most likely reasons your credit committee would decline this transaction?"
An early decline is useful. A decline after eight weeks can cost you the acquisition. On the Texas HVAC platform close described below, more than 25 lenders were run in a parallel tournament off one data room before the structure was funded.
6. Build one master data room
Build the complete room once, then prepare lender-specific views of it.
| Buyer folder | Target folder | Transaction folder |
|---|---|---|
| Buyer biography, personal financial statement, credit authorization, proof of liquidity, ownership structure, relevant operating experience, background disclosures, sources of equity | Three years of financial statements, year-to-date financials, tax returns, bank statements, receivable and payable aging, customer concentration, payroll records, debt schedule, fixed-asset register, contracts, licences and permits, insurance, litigation and compliance disclosures | Signed LOI, purchase agreement drafts, sources and uses, capital-stack diagram, financial model, quality-of-earnings work, valuation support, integration plan, closing checklist |
Every number must agree across the LOI, the financial model, the lender summary and the legal documents. A small inconsistency makes the entire file feel unreliable, and reliability is what a credit committee is actually assessing.
7. Protect the borrower from LOI to wire
Underwriting evaluates a financial snapshot that has to remain true through closing. During the process: avoid opening new credit, avoid large personal purchases, maintain required liquidity, keep taxes current, document unusual deposits, disclose legal or credit issues early, preserve the operating performance lenders approved, and ask before moving money between accounts.
A buyer can have an excellent target and still lose financing because their own financial position changed during underwriting.
8. Investigate every important person early
Run legal, bankruptcy, regulatory, lien and background checks on the buyer, the seller, guarantors, key partners, major equity holders and critical operators. Disclose material issues before a lender finds them. An issue surfaced in week one can usually be handled through disclosure or structure; the same issue found in closing week can end the transaction. Use qualified legal and compliance professionals for this work.
9. Manage the seller as carefully as the lender
The seller is part of your financing timeline. Send a short weekly update covering diligence completed, financing milestones completed, open requests, items needed from the seller, expected decisions, and the current closing forecast.
Silence creates doubt, and doubt is what makes a seller reopen negotiations or take another buyer's call. Give a timeline you can defend, with room for underwriting and document revisions.
10. Use a weekly closing scoreboard
Every Monday, update these numbers: days remaining under the LOI, active lenders, active equity sources, current equity gap, outstanding diligence items, open lender conditions, open legal conditions, cash required at closing, liquidity remaining after closing, next decision deadline, current forecasted closing date, and the person responsible for each open item. Anything without an owner and a deadline does not move.
11. Prepare the fallback before you need it
For every critical source, answer one question: what happens if this party walks away tomorrow? Have ready a second lender, a smaller transaction structure, additional seller financing, an extension request, a reduced cash-at-close option, a preferred-equity alternative, a revised earnout, a purchase-price adjustment, and a documented walk-away point. Negotiating leverage comes from having another executable path.
12. Treat closing week as its own project
Before the wire date, confirm final sources and uses, wire instructions through a verified channel, entity names and ownership, insurance binders, lien releases, good-standing certificates, funding conditions, signature pages, seller-note documents, equity subscription documents, the closing statement, the working-capital adjustment, and post-closing access to bank accounts, payroll, contracts and systems.
Hold one closing call where every open condition is assigned to a named person with a deadline. The transaction closes when the checklist is complete, not when everyone feels confident.
The first 14 days after signing an LOI
| Days | What gets done |
|---|---|
| 1 to 2 | Confirm sources and uses, the financing box, buyer liquidity, and seller expectations |
| 3 to 5 | Build the master data room and reconcile the financial statements |
| 6 to 7 | Launch lender and investor outreach in parallel |
| 8 to 10 | Collect initial feedback and identify the likely credit objections |
| 11 to 12 | Revise the structure, model the downside, and fill documentation gaps |
| 13 to 14 | Select the strongest financing paths, create backups, and give the seller a defensible closing forecast |
This is a preparation sprint, not the whole timeline. The financing process itself commonly runs months.
What this looked like on a closed deal
Cody Sechelski used this kind of process to close the inaugural acquisition of his Texas HVAC roll-up, a transaction totalling $2,660,000 in sources and uses. The structure combined a $1,000,000 senior term loan, a $532,000 seller note on standby, $798,000 of seller rolled equity, and roughly $330,000 of sponsor cash and reserves, with more than 25 lenders run in parallel off a single data room and a late-stage restructure to reach the wire. He booked his first call in October 2025 and closed in July 2026. The close was covered by Yahoo Finance, AP News, Morningstar and The Globe and Mail, and he walks through it himself on the podcast.
Read the full breakdown in his case study.
Frequently asked questions
How long does it take to close an acquisition after signing an LOI?
Commonly 60 to 120 days for an SBA or bank-financed transaction once the package is complete, and longer when the structure has several layers or diligence surfaces problems. The first fourteen days decide most of it, because that is when the data room, the financing box and the parallel lender outreach are either done properly or not.
What is an equity gap in an acquisition?
The equity gap is total uses minus senior debt, seller financing, assumed debt, rollover equity and any mezzanine or preferred equity. Total uses includes fees, working capital, integration costs, taxes and a contingency reserve, not just the purchase price, which is why the gap is usually larger than buyers expect.
Should I approach lenders one at a time or all at once?
In parallel. A sequential process gives each lender control of your timeline and turns one decline into weeks of lost LOI period. Send the same core package to several qualified sources at once and track every response against a single scoreboard.
Why do acquisitions fall apart between LOI and closing?
Most commonly: the equity gap was calculated after the LOI, the buyer's personal financial position changed during underwriting, numbers disagreed across the model and the legal documents, a background or lien issue surfaced late, or the seller lost confidence because nobody was updating them.
What should be in a data room for an acquisition?
Three folders: buyer (biography, personal financial statement, proof of liquidity, ownership, experience, disclosures), target (three years of financials, tax returns, bank statements, aging, customer concentration, payroll, debt schedule, contracts, licences, insurance, litigation) and transaction (LOI, purchase agreement drafts, sources and uses, capital-stack diagram, model, quality of earnings, integration plan, closing checklist).
What happens if my lender declines after weeks of diligence?
That is why a fallback is prepared in advance: a second lender already holding the package, a smaller structure, additional seller financing, an extension request, or a preferred-equity alternative. Asking every lender on the first call what would make their credit committee decline is what surfaces the answer early enough to act on.
Where to go next
- How Raises.com structures and raises capital for acquisitions, flat fee, no success fee, no carry.
- How to raise money to buy a business in 2026, with all nine funding sources ranked.
- Raising the equity gap from investors through an SPV.
- Bring us the deal and we will identify the open capital layer, the documentation gaps, and the most likely path to closing.
This page is educational and does not constitute legal, tax, securities or investment advice. Have qualified professionals review your specific transaction.