the cancellation rate
A bank credit committee has already said yes, the buyer has already spent money on diligence, and the deal still does not close. It happens to close to one approved acquisition loan in eleven, and the reasons repeat.
median loan, rate and term
Below a certain size, the price of a business is not set by a multiple. It is set by what the buyer's loan payment does to the cash flow, and that is arithmetic anyone can do.
the diligence stage
A quality of earnings exercise decides what number the price gets multiplied against. It is the most consequential few weeks in a sale and the one sellers prepare for least.
the closing mechanics
Almost every purchase agreement requires the seller to leave a normal level of working capital in the business. Deciding what normal means is a negotiation, and it is worth real money.
the transition problem
An earnout pays part of the price later, if the business performs. It is proposed when buyer and seller cannot agree on what happens after the owner leaves, and it disappoints more often than it satisfies.
the financing gap
The bank funds part of the price, the buyer funds part, and very often the seller funds the rest by being paid over time. That note is the most common way a deal above the bank's ceiling gets done.
the money held back
The purchase agreement asks the seller to make a long list of statements about the business, and holds back part of the price against them being wrong. This is the part of the document sellers read last and should read first.
lender concentration
A buyer's offer is worth what their financing is worth. Acquisition lending is concentrated in a small number of institutions, and knowing which one a buyer is using tells you a lot about whether you will reach a closing.
the term distribution
Whether the seller also owns the premises changes the financing, the timetable and the price. The loan terms in the federal file show exactly how often it happens.
the loan size distribution
The SBA caps a 7(a) loan at $5M. That ceiling is visible in the data, and crossing it moves a business into a different financing market with different buyers.
the franchised share
Close to a fifth of these transactions are resales of franchised units. The franchisor is a third party with approval rights over the buyer, and that changes the process.
the process itself
The letter of intent is not binding on price but it is the moment a seller's negotiating position is strongest. Almost everything that goes wrong later was decided, or left undecided, in that document.