The short answer: Closing a business purchase runs in four stages, Letter of Intent (locks price and exclusivity) → due diligence (verify the numbers and risks) → purchase agreement (the binding contract) → closing day (fund, sign, get the keys). For an SBA-financed deal, budget 60 to 120 days from signed LOI to close. Get a transactional attorney involved before you sign the purchase agreement.
The four stages of a close
Every small-business acquisition moves through the same four gates. Skipping or rushing one is how buyers overpay or inherit a problem they never saw.
| Stage | What it does | Typical time |
|---|---|---|
| 1. Letter of Intent | Sets price, structure, and exclusivity so you can invest in diligence | 1 to 2 weeks |
| 2. Due diligence | Verify financials, legal, contracts, and operations before you commit | 30 to 60 days |
| 3. Purchase agreement | The binding contract, reps, warranties, indemnification, price adjustments | 2 to 4 weeks |
| 4. Closing day | Lender funds, documents sign, money and ownership change hands | 1 day |
A close is not one event. It's four decisions, and every one of them can save or sink the deal.
Stage 1, The Letter of Intent
The LOI turns a handshake into a working framework. It states the price, the deal structure (almost always an asset sale), and, critically, an exclusivity period so the seller can't shop your offer while you spend money on diligence. Most of it is non-binding; the exclusivity and confidentiality clauses usually are binding. Not sure whether you're at LOI stage yet? See IOI vs LOI. Start from our free LOI template.
Stage 2, Due diligence
Once the LOI is signed, you verify everything the seller claimed. Financial diligence confirms the earnings are real (sometimes with a Quality of Earnings report); legal and operational diligence surfaces the red flags that kill deals. Work the full buyer due diligence checklist and pull our downloadable checklist so nothing slips.
Stage 3, The purchase agreement
The definitive purchase agreement (usually an Asset Purchase Agreement) is the contract that actually governs the deal, representations, warranties, indemnification, and the escrow, earnouts, and working-capital peg that decide who bears which risk. This is where a deal lawyer earns their fee.
Stage 4, Closing day
On closing day, the lender funds, everyone signs, and ownership transfers. Have your checklist ready so you leave with the keys, the bank accounts, the domains, and the passwords.
The complete closing library
Nine deep-dive guides, read them roughly in deal order, or jump to the one you need right now.
The two documents you'll use most
Start your offer and your diligence from templates that already have the structure right.
Before you get here
Closing is the last leg. If you're still earlier in the journey, start with how to value a business and SBA loans to buy a business, and pressure-test your price with the valuation calculator.
Frequently asked questions
Sign a Letter of Intent (price + exclusivity), run due diligence, negotiate and sign a definitive purchase agreement, satisfy closing conditions like lender approval and lease assignment, then close by funding and signing. Most small-business deals take 60 to 120 days from accepted LOI to closing day.
For an SBA-financed deal, roughly 60 to 120 days from signed LOI. Due diligence takes 30 to 60 days, SBA underwriting and closing adds weeks, and third-party items like lease assignment or license transfers can stretch it further.
Mostly non-binding, price and structure are proposals subject to diligence and a definitive agreement. But exclusivity (no-shop), confidentiality, and expense clauses are usually binding on purpose. See the LOI guide.
Yes. A transactional attorney who handles small-business M&A should draft or review your purchase agreement, disclosure schedules, and closing documents. The legal cost is small next to the price of a hidden liability.
Sources
- Deal-process and closing-timeline guidance, Acquisition Stars, Morgan & Westfield (2025 to 2026).
- LOI vs IOI framing, BizBuySell.
