How to Build Your First Offer
Building your first offer can feel overwhelming, but it doesn’t have to be. This guide walks you through the essential components of a strong, clear, and realistic offer — one that reflects your goals, protects your interests, and keeps the deal moving forward.
What this guide helps you do
- Understand the essential components of a strong offer.
- Structure terms that are clear, realistic, and financeable.
- Balance price, risk, and deal structure effectively.
- Communicate your offer in a way that builds trust and momentum.
- Prepare for negotiation and next steps after submission.
What your first offer is meant to do
Your first offer — whether an LOI or an offer to purchase — is not the final contract. Its purpose is to outline the major terms, show serious intent, and create a framework for due diligence. A strong offer is clear, simple, and aligned with what lenders, sellers, and advisors expect at this stage.
Start with price and deal structure
Price is only one part of the offer. Structure — how the price is paid — often matters more to both lenders and sellers.
- Purchase price based on cash flow and valuation norms.
- Down payment amount (cash or seller financing).
- Loan amount and financing assumptions.
- Seller note terms, if included.
- Earnout or performance‑based components (optional).
Clarify what’s included in the sale
Your offer should clearly state what you expect to receive. This prevents misunderstandings and ensures alignment before due diligence begins.
- All operating assets needed to run the business.
- Inventory levels or valuation method.
- Equipment list and condition expectations.
- Customer lists, contracts, or recurring revenue streams.
- Intellectual property, brand assets, and digital accounts.
Define working‑capital expectations
Working capital ensures the business can operate on day one. Your offer should reference a normalized working‑capital target or state that it will be determined during due diligence.
- Expected level of receivables, payables, and inventory.
- Seasonal adjustments if applicable.
- Method for calculating normalized working capital.
- Adjustment mechanism at closing.
- Protection against pre‑closing cash withdrawals.
Include clear contingencies
Contingencies protect you from committing to a deal before you have full information. They also set expectations for what must be satisfied before closing.
- Financing approval (SBA or bank).
- Satisfactory due diligence.
- Review of financials, tax returns, and contracts.
- Lease assignment or new lease approval.
- Clear title to assets and equipment.
Define transition support
Transition support helps ensure a smooth handoff. Your offer should outline what you expect from the seller after closing.
- Training period (hours or weeks).
- Availability for questions after training ends.
- Non‑compete terms and geographic scope.
- Non‑solicitation of employees or customers.
- Optional consulting agreement if needed.
Set a clear timeline
A defined timeline keeps the deal moving and shows professionalism. It also helps both sides plan for due diligence and closing.
- Target date for completing due diligence.
- Expected closing date.
- Deadlines for providing documents.
- Exclusivity period (if included).
- Expiration date for the offer.
Key takeaways
- A strong offer is clear, realistic, and aligned with financing requirements.
- Price matters, but structure, risk, and clarity matter more.
- Contingencies and transition terms protect you during the process.
- Your offer sets the tone for due diligence and negotiation.
Want help building your offer?
If you’d like support structuring terms, evaluating risk, or preparing your LOI, we can walk through your offer together step‑by‑step.