I was in Houston on Friday, October 16, for the Rice University ETA conference with Valerie Stash, our COO, and Andrea Parada from our M&A sales team.

I spoke on “Reading the Deal, Not the Pitch” and moderated the closing panel, “So You Bought a Business. Now What?” We spent the day talking with buyers and operators about what it takes to get a deal closed and what happens once you own the business.

I came away thinking about how closely those two conversations are connected. The assumptions you make during diligence become the decisions you have to live with after closing. With year end approaching, that is a useful place to start.

There is always pressure to keep a transaction moving. Buyers have invested time and money, sellers want certainty, and everyone has a target date. But speed only helps when the people involved are working from the same information. Much of what we discussed at Rice came back to getting that information early and understanding what it means for the business you are buying.

Reading the deal, not the pitch

A recurring theme at Rice was the value of assembling your deal team early. Get to know attorneys, quality of earnings providers, lenders, and financing advisors before a deadline forces you to choose. Understand how they communicate, what they need from you, and which kinds of transactions they handle.

You can build those relationships before committing to the full cost of a transaction.

A preliminary review of the seller’s materials can help identify major concerns and scope the work before a formal quality of earnings report. The goal is to understand where you need more information while the LOI and price are still being negotiated.

Before engaging someone, ask what they will deliver, what falls outside their scope, and what they need from the seller to get started. Also ask how they handle a finding that changes the transaction. You want an advisor who can explain the consequence and help you decide what to do next.

Introduce the team to one another once there is a real transaction to work on. The accountant should know who is reviewing the financing, and counsel should understand the proposed ownership and capital structure. That gives people a chance to flag a conflict before they spend time building around an assumption that will have to change.

Working capital deserves that attention. Agree on the framework in the LOI and understand how much cash the company needs to operate. Two people can agree on the purchase price while holding very different expectations about the receivables, inventory, and liabilities that come with it.

I would want to know how the proposed working capital amount was calculated and how it compares with what the business actually uses. Look at timing.

• When do customers pay?
• When do suppliers need to be paid?
• What has to be purchased before a job can be completed?

Those questions connect the purchase agreement to the cash you will need after closing.

Get specific about what is included in the working capital calculation. Review whether receivables are collectible, whether inventory can actually be sold or used, and whether outstanding obligations have been captured. A balance that looks sufficient on paper may be less useful if much of it is tied up in old receivables or inventory that has stopped moving.

I would also ask the buyer and seller to walk through the same illustrative closing calculation with their advisors. Use a clearly labeled example to show what happens if the delivered working capital is above or below the agreed amount. That conversation can expose a disagreement about definitions before it becomes an argument about dollars.

Keep the purchase agreement calculation connected to your opening cash plan. Even if the seller delivers the agreed working capital, you still need to understand when cash will arrive and when it will leave.

Payroll, supplier payments, and customer collections do not all occur on the day ownership changes.

Apply the same scrutiny to add backs. If an expense supports revenue, assuming it disappears under new ownership can overstate the cash available to service debt. Know what each adjustment represents, why it is reasonable, and what evidence supports it.

If the seller has been doing work that you will need someone else to perform, include that replacement cost in your thinking. The relevant question is what earnings look like with the people and resources required to run the company under your ownership. That is the business you are financing.

For each meaningful add back, I would keep a short explanation alongside the supporting document. What was the expense? Why should it change? Will anything replace it? Who has reviewed the adjustment? That is easier for everyone to evaluate than a large total supported only by a general description.

Pay particular attention when the same adjustment appears in the broker’s presentation, the buyer’s model, and the lender’s analysis at different amounts. Resolve the difference and keep a record of the agreed treatment. Otherwise, the buyer may be planning around earnings that the financing team is not prepared to use.

What diligence needs to connect

Legal, accounting, financing, and operating diligence examine different parts of the same business. Historical claims, insurance costs, revenue recognition, and management responsibilities can all affect the economics. An issue does not become irrelevant simply because it occurred years before the sale.

A quality of earnings report helps test the earnings and cash flow supporting the transaction. A valuation addresses what the business is worth. Both depend on understanding the underlying information. Revenue recorded when invoices are issued can tell a different story from revenue matched to the period when work was performed.

Those findings need to reach everyone whose work depends on them. A cash flow adjustment may affect financing, the purchase agreement, and the buyer’s operating plan. I would rather have that conversation early than discover near closing that different advisors have been working from different assumptions.

A useful question for each advisor is, “What are you seeing that the rest of the team needs to understand?” Then make sure someone owns the next step. A diligence finding sitting in a report does not help much if nobody has translated it into a decision about price, structure, financing, or operations.

One practical way to coordinate the work is to maintain a short list of open decisions. For each item, record the question, the information needed, the responsible person, and what depends on the answer. Keep that separate from a general document request list. Uploading a file and resolving the issue behind the request are different tasks.

For example, a question about customer concentration may require accounting analysis, a conversation with management, and a review of customer agreements. The eventual answer should inform both the financing discussion and the transition plan. Treating each request as an isolated task can obscure why the team asked for the information.

AI can help advisors review information faster, but the work still needs to be checked. Ask how your providers use these tools, how they protect confidential information, and who is responsible for validating the output. More pages of analysis do not necessarily mean better answers.

I would use AI to organize questions and identify information that needs a closer look, then ask the relevant advisor to assess the material points. Sending every generated concern to every person on the deal can create work without improving the decision. Prioritize the issues that could change earnings, liabilities, financing, or your ability to operate the business.

The J curve and first 90 days

The operator discussion reinforced how much can change after ownership transfers. A decline in performance can come from several directions at once: orders pulled forward before a sale, customers reacting to price changes, a market slowdown, or supplier relationships that do not transfer as expected.

Before deciding what has gone wrong, spend time with customers, employees, and suppliers. Look at order patterns and inventory alongside the financial statements. A strong final year deserves the same scrutiny as a weak one, particularly if the improvement depends on assumptions you have not tested.

I would want a starting picture of the business that goes beyond last year’s EBITDA. Look at recent order activity, customer retention, staffing, inventory, collections, and the work still to be delivered. Those measures can help you distinguish an operating problem from a timing issue when the first month under your ownership looks different from the model.

Be careful about treating every change as evidence that the seller misrepresented the company or that employees are resisting you. Test the explanation. A customer conversation or a review of the order book may tell you more than another round of speculation around the financial statements.

Also understand who actually does the work.

An owner who appears removed from daily operations may still hold important relationships or solve problems that nobody else handles. Spend time in the business across shifts and functions. Identify critical roles and consider what happens if someone leaves shortly after closing.

I would ask how the company handles a customer complaint, an urgent order, a staffing shortage, and a delayed shipment. Following those situations through the business can show you where authority really sits. It also helps separate a documented process from a process that works because one person remembers every detail.

Build the transition plan around responsibilities.

• Who will introduce you to key customers and suppliers?
• Who knows how pricing exceptions are approved?
• Who handles payroll and collections?
• What information or access does the seller control today?

Write down how those responsibilities will transfer and how you will know the handoff is complete.

Employees will also be trying to understand what the change means for them. Be clear about what you know, what you are still learning, and how decisions will be made. Asking people to explain why a process exists can reveal something worth preserving, even when the process initially looks inefficient.

A cash cushion and supplier alternatives give you room to learn. Treat the early months as a period of observation as well as execution. You need enough flexibility to respond to what you find without making every decision under immediate financial pressure.

That does not mean postponing every change. It means knowing why you are making it and what you expect to happen. If you change pricing, staffing, and customer service at the same time, understanding the results becomes more difficult. Give yourself a way to see whether the business is responding as expected.

Pricing, investors, and the operator’s job

Pricing needs to reflect the value customers receive and the alternatives they have. Review the largest accounts individually, consider possible churn, and understand what additional service or training may be needed. Customer concentration matters because the same price change can have very different consequences across businesses.

I would also separate a pricing opportunity from an assumption needed to make the acquisition work. If your financing plan depends on customers accepting higher prices immediately, that deserves careful attention during diligence. Understand the current relationship, how pricing has changed historically, and what customers receive for the increase.

Look at the economics of individual relationships as well as total revenue. A large customer can require unusual service, training, delivery, or payment terms. Understand those demands before deciding what a pricing change should accomplish. The objective is a relationship the company can serve profitably and reliably.

If you pursue an increase, plan how it will be communicated and what you will monitor afterward. Watch account retention, order activity, and service demands together. A higher price has to be considered alongside what happens to the relationship.

Choose investors with similar care. Useful relationships and agreement on the intended exit can matter well beyond the initial equity check. Understand how future acquisitions and additional capital would work, and put expectations in writing. Talk with people who struggled in the industry as well as those who succeeded.

Discuss the situations that are harder to talk about when everyone is excited about the acquisition. What if performance is below plan? What if the company needs additional cash? What if an attractive second acquisition appears earlier than expected? Ask counsel to help document the relevant rights and responsibilities so everyone understands the arrangement before funds are committed.

The owner’s role also has to evolve. Continually filling every staffing gap can leave you doing more work while the company remains dependent on you. Build management, clarify responsibilities, and use systems that show where sales and operations are getting stuck. Preserve what employees and customers value while improving processes that rely too heavily on one person.

Two lessons from the past month

Recent deal work has reinforced a distinction that is easy to miss: a completed quality of earnings report still needs to clear the lender’s review. We have seen a transaction approach its target closing date with supporting information and that review still outstanding.

Confirm the provider, scope, reporting periods, proof of cash, and any reliance requirements early. Then agree on who will answer follow up questions and when. A report delivered to the buyer is one milestone in that process. Ask what still has to happen before the lender can use it for final approval and closing documents.

In the recent example, the outstanding work involved additional support for seller questions, proof of cash, and wording needed for the bank to rely on the report. The broader lesson is to understand the lender’s acceptance process when the engagement is being scoped, including whether another review is involved.

I would want a clear answer to three questions: what must the provider deliver, who at the lender needs to accept it, and what happens if the financial information needs to be updated before closing? Share those answers with the buyer and seller so the request does not arrive as a surprise.

When a report is nearly complete, check the remaining work with the people actually responsible for it. An expected delivery date from the preparer is not automatically the date the bank will finish its review. The closing plan needs to allow for both steps and for any questions between them.

Another lesson is to settle the ownership structure and sources of equity before final underwriting. In recent conversations, proposed changes to investors and funding sources created additional questions late in the process. More available cash can still require more review.

Gifts, borrowed funds, and ownership investments need to be described accurately. Give the lender and counsel a consistent ownership schedule and sources and uses, and discuss proposed changes before documenting them or moving money. That helps everyone work toward the same closing structure. A conversation held early is usually easier to manage than a new ownership question raised when documents are already being prepared.

I would put the ownership schedule next to the sources and uses and make sure the story is consistent. Who is contributing the money? What does that person receive in return? Is there a repayment obligation? Where are the funds coming from, and what evidence will the lender need? Those answers need to match the agreements being prepared.

If the structure changes, send one clear explanation of the proposed change to the people reviewing it. Identify what is different and ask what needs to be revisited. A new investor or source of funds may be helpful, but the team still needs to understand how it affects the transaction already under review.

Closing a deal by year end

If December 31 is your target, work backward from the stage you are actually in. The process includes an LOI, lender term sheets, diligence, underwriting and commitment, the definitive purchase agreement and closing documents, and funding. QoE, legal, valuation, insurance, and other third party work all need to fit together.

One private credit fund we spoke with described about 90 days from the first conversation to closing, potentially compressing to about 60 days when third party work runs in parallel. A separate debt and equity fund described as little as 30 days from agreement on terms to wiring funds, with roughly two months more typical. These are different funds with different starting points.

As of mid October, a new 90 day process already points into January. A 60 day path leaves little room beyond late October to have the opportunity in active lender review, with financing organized and a responsive seller. October 31 is a planning reference, not a promised deadline. Signing an LOI by itself does not start or complete the lender’s work.

SBA timing depends on the lender and the third party reports. I would not apply a fund’s estimate to every SBA transaction. If you are still searching or negotiating price, plan around a likely 2027 closing. If you are already under LOI, identify each outstanding item, who owns it, and which tasks can move forward together.

The next useful conversation is often about dependencies. Which report is the lender waiting for? Which documents cannot be finalized until the ownership structure is settled? Which seller questions remain unanswered? A target date becomes more useful when you can connect it to specific work and a person responsible for completing it.

I would separate the remaining work into items needed for credit approval, items needed to prepare documents, and items needed to release funds. Ask the lender and closing team to confirm where each item belongs. That makes it easier to see which unresolved question is actually holding up the next step.

Then review the list with the seller and advisors at a consistent cadence. A useful update says what changed, what remains open, who is responsible, and when the next answer is expected. A general statement that the deal is moving forward is less helpful when several people are waiting on one another.

Also distinguish between work that has been requested and work that has been accepted. A purchase agreement sent to counsel may still have open points. An insurance submission may still need review. Equity may be available but not yet documented to the lender’s satisfaction. The status should describe what remains to be done.

If a date starts slipping, communicate the reason and the next decision point. Buyers and sellers can work with a specific explanation more easily than repeated assurances that closing is close. I would rather reset expectations with useful information than keep repeating a date the team cannot support.

Where we are on the non SBA desk

Our non SBA desk works with independent sponsors and searchers on acquisitions that are too large or structured differently for standard SBA financing. Recent lender conversations show how much fit can vary. These are individual examples, with terms and timing dependent on the transaction.

A regional bank wants a connection to its market through ownership, investors, or operations. It looks for leverage below about three times cash flow and about 30 percent equity, with amortization of three to seven years and a balloon in longer structures. It can lend up to about $10 million but prefers $8 million to $9 million to leave working capital room.

For a sponsor considering this type of bank, I would make the market connection easy to understand and explain the proposed repayment structure alongside the operating plan. Ask how the bank evaluates the business and what room it wants to preserve for working capital. Those questions matter as much as the headline borrowing amount.

A private credit fund provides senior first lien debt to businesses with at least $5 million of EBITDA, generally with check sizes of $15 million to $75 million. It avoids oil and gas, life sciences, and heavy AI or software exposure. Its process starts with a confidential information memorandum and a five year model, followed by an indication of interest and two phases of diligence. After a term sheet, it asks for a deposit covering legal and QoE costs.

For this type of process, the materials need to explain the earnings, the proposed capital structure, and the assumptions behind the model. If the sponsor expects an improvement in margins or growth, show what has to happen operationally to achieve it. Be ready to explain the business under a more conservative outcome as well.

A debt and equity fund invests $5 million to $25 million per platform through a combination of debt and equity. Its debt structure is five year interest only with no personal guarantee. It looks for at least $2 million of EBITDA, prefers sponsors focused on growth over daily operations, and wants to see opportunities after LOI but before QoE.

A capital provider that invests in both debt and equity is also evaluating the ownership relationship. Understand how the proposed structure fits your plans for management, growth, distributions, and an eventual exit. The absence of a personal guarantee in one provider’s structure does not, by itself, tell you whether the overall arrangement fits your goals.

Across these conversations, sponsors need to understand equity sources, seller rollover, working capital, and who will run the company. Rollover terms that buyer and seller agree on may need changes to fit institutional capital. Bring those expectations into the financing discussion early.

The amount a lender can provide is only part of the fit. The ownership plan, management team, repayment structure, and timing also have to work. A lender with the right check size can still be the wrong match for the way you intend to own and operate the company.

Our engagement is nonexclusive until a sponsor accepts a credit approved financing commitment from a lender we introduced. Acceptance can include signing, written acceptance, or paying a commitment fee or deposit. A term sheet alone does not trigger exclusivity.

What we have closed recently

Through October 13, our 2026 pipeline records 44 closed loans representing approximately $105.6 million in loan volume. The average recorded loan amount is approximately $2.4 million.

The businesses represented include machining and tooling, home health and hospice, accounting and tax services, restaurants, and ecommerce. These examples show the range of businesses we work with; the financing still needs to fit the cash flow and structure of each transaction.

Those figures describe recorded loan entries across the closed pipeline, including different loan types, refinancing, and real estate transactions. The average is a loan amount, not an acquisition purchase price or an average limited to SBA 7(a) loans. For an SBA opportunity, we can help assess the financing need and the appropriate scope of support.

I would be careful about using the average as a target for your own transaction. Two acquisitions with similar purchase prices can have different financing needs because of working capital, real estate, existing debt, and the ownership structure. Start with the actual uses of funds and the business’s ability to support them.

The range of businesses also reinforces why lender selection needs to be specific. A lender needs to understand how the company earns money, what could interrupt that cash flow, and who will manage it after closing. A well organized explanation of those points is more useful than assuming a transaction will fit because another business in the same broad industry obtained financing.

What to do this month

If you are pursuing an SBA acquisition, get specific about working capital, add backs, and your deal team. If you are under LOI, review financing and third party reports against the intended closing date. Make sure the seller understands what is still needed and when it needs to arrive.

If you are still evaluating an opportunity, organize the materials you already have and clearly identify what is missing. Keep the seller’s financial information separate from your own assumptions and note where you need clarification. That lets an advisor spend the conversation evaluating the transaction instead of reconstructing the file.

If you are already under LOI, bring the current financing structure, ownership schedule, available equity information, and the latest list of lender questions. Explain what has changed since the initial discussions. An updated picture of the deal helps the team focus on the questions that matter now.

For non SBA sponsors, prepare a teaser with industry, geography, EBITDA, and the proposed structure. Know where the equity will come from, what the seller expects from any rollover, and how management will run the business. Before commissioning QoE, check when the prospective lender wants to see the opportunity. Some want to review it first.

Whether you are still searching or already working toward closing, bring us the questions you are trying to resolve. An early conversation about the structure can help you decide what to investigate next and which financing conversations are worth pursuing.

Thanks for reading!

For pre-LOI buyers ready to explore opportunities: Schedule a meet & greet call​

Already have a deal under LOI and need financing help: Schedule an LOI consultation​

Independent sponsors on a non-SBA deal (pre-LOI): Schedule a financing call with Rafael​

Independent sponsors with a deal under LOI: Schedule an under-LOI call with Rafael​

Until next time,

Matthias Smith

President, Pioneer Capital Advisory

​www.pioneercapitaladvisory.com​
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Disclaimer: The information in this newsletter is for informational purposes only and should not be considered legal or financial advice. Business buyers are encouraged to consult with their legal counsel and accountant to ensure the proper structuring of their transactions and to fully understand the tax implications of seller financing.

Thanks for reading. Feel free to reply directly to this email with any questions or thoughts.