When to Post a Deal?

April 20, 2023

by a searcher from University of Nebraska - Omaha in Peachtree City, GA, USA

I've encountered some information that is customary to include your financing structure to sellers via an IOI/LOI. I'm looking to combine personal capital, SBA debt, and outside capital to fund a selected deal. Is it also customary to submit LOI's before investors are fully locked in? What about submitting a deal to the SearchFunder platform before an LOI is submitted to solicit investors?

If not already apparent, I'm searching for my very first deal--so any commentary surrounding my intentions or stated capital structure would be welcome!

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Reply by a professional
from Villanova University in West Chester, PA, USA

Hi ^redacted‌! I hope you're doing well. There are multiple ways you can do this. Generally, you want to build investor relationships as you are working on identifying your acquisition target and if you can, get verbal commitments or IOI's based on your investment thesis, background and experience prior to submitting an LOI. Although, you can find investors after finding a business, it takes a lot of time to fundraise and vet your potential investors, and you don't want to delay the deal. So, you'll want to lay the ground work for this and develop relationships in advance as much as possible. Once you have a deal under LOI, you present it to investors, confirm investments, and find additional investors as needed. You'll need to have an attorney throughout this process as there are a lot of compliance requirements throughout this process. I would be happy to help with this if you need legal support.

Reply by a searcher
from University of Calgary in Calgary, AB, Canada

I agree with Laura above, you want to know who you are going to pitch a deal to at least for the first check or two, those people would generally be able to connect you to other capital as well if needed. But don't be afraid to sign LOIs, you have the power to exit the LOI whenever you like so if you like the industry and have good comfort with the seller, sign it up and put together an overview for investors at that point. If you get enough negative feedback at that point you can release the seller from the LOI and go on to the next one but investors don't have the time to go over every potential deal with you so get a sense of the spaces they like and the economics that would inspire them and then go out and look for a deal to present to them.

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