What Made This Twin Cities Business Acquisition a Success

After every closed transaction, I like to take a step back and reflect on what contributed to the deal’s success. Recently, we facilitated the sale of a distribution business in the Twin Cities. The buyer was an individual, while there were three sellers—two of whom were looking to retire, and one who wanted to stay on with the new owner.

The timeline for this deal was relatively quick. We took the business to market in mid-November 2023, signed the Letter of Intent (LOI) in mid-March 2024, and closed by mid-June 2024. Let’s break down the key factors that led to this success:

 

Sticking to a Proven M&A Process

 

From the moment we went to market, we stayed laser-focused on our plan. We started by presenting buyers with a Blind Profile—no asking price, just enough information to spark interest. Our goal was to let the market set the price.

We reached out to over 100 potential buyers, and 30 of them signed a Non-Disclosure Agreement (NDA). Once they signed, we shared a Confidential Information Memorandum (CIM), packed with essential details about the business. From there, interested buyers were asked to submit an Indication of Interest (IOI) by the first week of February 2024. This non-binding document outlined their proposed offer, terms, and financing plan.

We received three IOIs, which is about 10% of those who signed NDAs—pretty standard. The three serious contenders included a private equity firm and two individuals. We then conducted interviews with all three at the business site. Ultimately, all three submitted Letters of Intent (LOIs), and we chose the winning bid in mid-March.

 

Sellers with Realistic Expectations

 

The biggest deal-breaker in business sales? Sellers with unrealistic expectations. Before we even signed a contract, I had candid conversations with the sellers about the market’s likely valuation. Fortunately, all three sellers were on the same page about what they could reasonably expect.

While there was some variation in the offers, the final accepted price was very close to our initial valuation, thanks to the sellers’ willingness to trust the process.

 

A Prepared and Focused Buyer

 

The buyer we ultimately chose was organized and serious from the outset. His background made him a perfect fit for the business, and he shared his personal financial statement (PFS) early on. He had also secured an SBA preferred lender, who moved quickly to ensure financing kept pace with the deal.

This level of preparedness allowed the deal to move forward smoothly. Both the buyer and sellers developed a strong level of trust, which helped us overcome any challenges along the way.

 

Sellers Kept Their Business Performance Strong

 

One of the most critical aspects of a successful deal is keeping the business performance solid through the finish line. These sellers didn’t relax once the LOI was signed, which is a common mistake. They continued to drive the business, outperforming their financial targets month after month.

This gave the buyer confidence that they were making the right investment and motivated them to close the deal before the sellers reconsidered their asking price.

 

Exceptional Legal Guidance

 

There’s a common saying in M&A: “Time kills deals.” Momentum is key, and delays can derail progress. Fortunately, both sides in this transaction had top-tier legal teams who kept things on track. This deal involved a complex F-Reorganization, which allowed the buyer to reap the tax benefits of an asset sale, even though it was technically a stock sale.

Thanks to the strong legal support, this intricate aspect of the deal was handled swiftly and efficiently.

 

Conclusion

 

Most M&A transactions take anywhere from 6 to 12 months to close. In this case, we closed the sale of this distribution business in just 8.5 months from signing the broker agreement, and only three months after signing the LOI.

The key reasons for this successful outcome? The sellers followed the M&A process, they had realistic price expectations, the buyer was highly organized with strong financial backing, the business’s financial performance remained strong, and both sides had excellent legal counsel. Together, these elements created the perfect environment for a successful close.