Order of operations post-LOI?

January 27, 2026

by a searcher from University of Pennsylvania - The Wharton School in Danville, CA, USA

Hi folks, I'm close to signing an LOI on a business. What's the order and timing of things once I sign an LOI? I believe I should start bank review and QofE immediately. Should I wait until after the QofE (or at least the proof of cash) before starting to engage a lawyer? (I know that time is the killer of all deals, but don't want to waste money if the QofE spots issues. So I know it's a balance.) I'd apprecaite your input here. Then when do I start insurance review? Any other professional reviews I need to do other than the operations review I need to do? Tech stack review? Also, I intend to use a ROBS. To confirm, post LOI I can use my own personal cash to do DD, then once I get on the other side of financial DD, start the C-Corp, fund with ROBS, and my out of pocket costs will be counted as part of the down payment by the SBA bank. Is that all right? I want to create a speedy DD process, but don't want to waste money. (As an aside, I don't have any major concerns with this deal right now.) Thanks, Cory

Reply by a professional
from University of California, Hastings College of Law in Petaluma, California, United States

Congrats on getting close to LOI. A pragmatic approach we see work well is to front-load learning, not spend: start bank prep and a tightly scoped QofE immediately, while running ops + commercial (GTM) diligence in parallel to validate how the business actually wins customers and sustains revenue. That combo often surfaces deal-killers (or confirms confidence) faster than financials alone. Keep legal engaged early but light, then ramp once early findings and proof of funds are clear. Insurance and deeper tech review (For service businesses, think of tech as enablement, not product. A light review helps confirm there’s no hidden delivery, billing, or reporting risk that could slow growth post-close) usually makes sense mid-DD, once the true risk and complexity are understood. Congrats again (from Nor. Cal. as well) :)

Reply by an investor
from Columbia University in Fairfax, VA, USA

You'll want to minimize broken deal fees if it doesn't close. Here's what I'd start with: 1) Engage lenders immediately (but stop before deposits). Getting lenders what they need will force you to complete your own personal and deal-level diligence anyway. I’d run this all the way up to the point where a lender asks for a deposit, then pause until you're confident you're on track towards a Purchase Agreement. I'd do this through a loan broker like ^redacted‌ – he'll be able to quickly narrow the lender universe to the ones that actually fit your deal structure and profile, and he'll naturally increase your lender surface area. It's free help. I'd use it. 2) Validate the Working Capital and SDE / Adj. EBITDA on your own first. This is not difficult to do if the seller or broker can provide basic A/R, A/P, inventory detail, and addback support (you'll need to request this info anyway for a QoE). If you want a quick checklist of exactly what you need to do this, feel free to DM me. Doing this first reduces the risk of paying for a QoE only to find something fundamental is off. And in some cases, it'll let you negotiate QoE scope and pricing because you’ve already organized the base data. 3) Engage law firms. I'd talk to 3-4, get them familiar with your deal, understand pricing and approach... but I wouldn’t sign an engagement letter until you’re confident you’re heading toward a Purchase Agreement. Also important: don’t hire your attorney until the seller confirms they’ve hired one. And if you have any influence, strongly push the seller to use an actual M&A attorney. If they end up working with an attorney with no M&A experience, it's going to add a tremendous amount of risk to the deal not closing. And beyond this, all the other stuff that folks have already mentioned. And in terms of ROBS: yes, the sequencing you described is generally right. The only thing I'd call out is that the out-of-pocket diligence costs can count towards the equity injection... but it's at the lender's discretion. Even with perfect documentation and structure, I would still verify this directly with the lenders you engage early.

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