You’ve built a strong manufacturing business. You’re finally ready to sell. But the biggest risk isn’t what you think—it’s what happens after the LOI. This is where most deals fall apart—because the business starts slipping when the owner takes their eye off the ball. Learn how to avoid the most common, most costly mistake that quietly kills more deals than anything else.
But first, what’s an LOI?
An LOI, or Letter of Intent, is a formal document that says a buyer is serious about purchasing your manufacturing business. It’s not the final contract, but it shows that both sides agree on the basic terms like price, payment method, and key conditions. Think of it as a handshake on paper—a promise to move forward, but with details still to be worked out.
For manufacturing businesses, receiving an LOI means the buyer has done some preliminary research and likes what they see. They want to dig deeper into your operations, financials, and contracts before committing fully. The LOI sets the stage for this next phase, called due diligence, where the buyer carefully checks everything to confirm the value and risks.
The LOI also protects both parties by outlining how the deal will proceed. It often includes exclusivity, meaning you agree not to negotiate with other buyers for a certain time. This helps avoid distractions and shows commitment. But remember, the LOI isn’t binding like a sales contract—you can still walk away if issues come up during due diligence.
Understanding the LOI’s role helps manufacturing owners prepare properly. It signals that the deal is moving from talk to serious steps. However, it also means you need to stay sharp in running your business while the buyer looks closer. Performance during this time can make or break the deal.
In short, the LOI is a key milestone. It means your business is attractive to buyers, but it’s also the moment to double down on operations, communication, and planning. Treat it like the green light to keep everything running smoothly, not a finish line where you can relax.
So you’ve probably heard that selling a business is like taking on a second full-time job. That’s true. But what no one tells you is that the first job—running your business—can’t take a backseat for even one week. Because buyers don’t pay for potential. They pay for performance—and they track it right up to the moment they wire the money. Let’s walk through how to avoid the deal killer that gets far too many manufacturing owners just inches from the finish line.
The Sale Is on the Table—Now What?
You’ve accepted an LOI. The buyer is serious. The number looks good. The terms seem fair. You’re starting to picture life after the close. Then it begins—the flood of diligence requests, phone calls with lawyers, financial reviews, insurance audits, facility walkthroughs. It’s a firehose. And as the owner, most of it lands on your plate. At the same time, your shop floor still has to run, orders still need to ship, parts still need to pass quality checks.
And that’s the problem.
A few missed shipments, a slowdown in invoicing, a delayed materials order—it all adds up. You might think “we’ll bounce back next month.” The buyer sees a downtrend and assumes it’s the beginning of the end.
Let’s say your business normally pulls in $1.5M in EBITDA each quarter. You’re selling at a 6x multiple. That’s a $9M enterprise value. But the quarter after the LOI, you’re buried in deal distractions. A late material shipment throws off production. A key operator takes a leave. You miss forecast. EBITDA drops to $1M. Now buyers want to “re-price” at $6M instead of $9M. You’ve just given them leverage. And they’ll use it.
It Happens More Than You Think
Roughly 30% of all signed LOIs don’t lead to a close. That stat surprises a lot of owners. Many think that once the LOI is signed, it’s just paperwork from there. The truth is, the LOI just opens the gate—now you’re in the race.
Buyers aren’t just confirming what they already know. They’re looking for any reason to walk back their offer or renegotiate. And declining performance gives them the perfect reason. One manufacturing owner watched EBITDA drop 50% in the final quarter before close. The reason? A winter storm disrupted logistics for several key shipments, and the operations team wasn’t equipped to handle it without the owner’s usual involvement. He was too tied up in buyer meetings and document reviews. The drop was temporary, but the buyer didn’t care. They backed out.
Your Two Jobs—and Which One Pays
It’s tempting to think of selling your business as the most important thing you’re doing. Emotionally, it feels that way. But in reality, running your business well is still job #1. Selling it is job #2.
Here’s the truth: if you stop doing job #1 (running your business), job #2 (selling your business) falls apart.
The business must keep running just as well—or better—while the deal is being finalized. Anything less, and buyers will assume it’s a trend. Even if you have a logical explanation, most buyers won’t gamble on it. They’d rather walk than risk overpaying for a business that looks like it’s already slowing down.
How to Protect Performance While Selling
Start by removing yourself from the center of the deal. If you’re the one who built the business, you’re probably the person buyers want to talk to. But that doesn’t mean you have to do everything. Appoint someone you trust—a CFO, operations manager, or even an outside advisor—to lead the deal process and field day-to-day questions. That frees you up to keep your eye on production, customers, and cash flow.
Second, quietly activate your team. You don’t have to tell them a sale is in progress. But you should tell them that the next 90 days are critical. Reinforce standards. Get weekly updates. Rally them around key metrics: uptime, delivery performance, scrap rates, margin contribution. Make it clear that now is the time to be sharp.
Next, tighten your customer relationships. Many deals get shaky because buyers discover one or two big customers are less committed than they thought. If you sense any hesitation from long-time clients, lean in. Over-communicate. Lock in orders. Extend contracts if possible. Let them know you’re not going anywhere—for now. And that their business is still your top priority.
Also, don’t let gross margin slip. Buyers love clean, stable margins. If input costs rise, act quickly—renegotiate supplier pricing, shift production, raise customer rates if needed. Show that you’re in control. A buyer who sees margins holding steady even as conditions change is more likely to trust your numbers.
Finally, keep investing in your business. This may sound counterintuitive when you’re trying to exit, but it shows strength. Don’t pull back on marketing, don’t delay equipment maintenance, and don’t pause hiring if it’s needed. A business that looks paused feels risky. A business that’s growing—even modestly—feels like a safer bet.
A Cautionary Tale That’s All Too Common
Picture a welding and fabrication shop that’s doing $10M in annual revenue and has a loyal customer base in heavy equipment manufacturing. The owner signs an LOI with a private equity group. He starts handing off quotes to the sales manager, skips the weekly ops meeting to talk to lawyers, and postpones reordering a key consumable to “watch cash flow.”
Three weeks later, delivery on a major job is delayed. The client gets nervous and starts talking to other vendors. The following month, sales are down 15%. The private equity group—seeing a soft quarter—asks for a lower purchase price. Deal negotiations stall. Six months later, the deal dies.
And the kicker? The shop rebounded two months after that. But the buyer was already gone.
That owner didn’t do anything reckless. He just stopped doing what made the business strong in the first place.
Keep Momentum Alive—Even When the Pressure Ramps Up
The final stretch of a business sale is a pressure cooker. As buyers dig deeper, they will probe every detail. Your responses, your numbers, your team’s performance—all come under a microscope. This isn’t the time to cut corners or coast.
One common trap is to become reactive instead of proactive. For example, if you notice a customer delaying payments, don’t ignore it hoping the buyer won’t notice. Instead, address it head-on—reach out to the customer, understand their concerns, and reassure them. Demonstrating control in tough moments signals strength, not weakness.
Another challenge is managing your own energy and mindset. Stress spikes, and it’s easy to get overwhelmed juggling operations and the deal. But remember: your leadership is the anchor. Your team is watching, and their performance often mirrors yours. Keeping calm, focused, and decisive inspires the whole business to hold steady.
How to Prevent Surprises When the Buyer Gets Nervous
Buyers hate surprises. One late shipment, one missed forecast, one angry key customer can send alarms ringing. If you can’t prevent surprises, at least be ready to explain them clearly and confidently.
Prepare a “bridge plan” for common issues. If there’s a seasonal dip, a temporary supplier delay, or a known project that’s late but paid for, document it. Have explanations ready and supporting data. This shows buyers you’re aware, transparent, and in control.
Also, don’t hesitate to involve your advisors early when red flags arise. They’ve seen these scenarios before and can help frame your narrative so buyers don’t jump to worst-case conclusions.
Why You Should Think Like a Buyer (But Act Like the Owner)
It might sound odd, but putting yourself in the buyer’s shoes is one of the smartest moves you can make. Buyers want to see a business that will continue to thrive after they take over. So, when reviewing operations, ask yourself:
- Are my financials rock solid, accurate, and easy to understand?
- Are my customers loyal and engaged?
- Are my key employees fully committed and performing?
- Are margins stable and improving where possible?
- Can I show a clear growth path even during this transition?
If you wouldn’t be confident buying your own business right now, then pause and fix what’s weak. You’ll increase your chances of closing and often boost your final price.
When to Get Help—and Who to Bring In
If you’re feeling stretched, bring in experts early. A skilled M&A advisor, an experienced CFO, or a deal-focused project manager can take weight off your shoulders. They understand the nuances that matter to buyers and can smooth communication and document flow.
Don’t wait until a problem threatens the deal. The sooner you have the right team, the smoother the process—and the less likely you’ll lose value because of avoidable hiccups.
3 Practical Takeaways You Can Use Right Now
Build a 90-Day Operations Playbook
Identify the top 3-5 performance indicators that matter most in your shop—like on-time delivery, throughput, gross margin, and customer retention. Assign owners. Review them weekly. Let your team know these numbers must stay strong during the sale process.
Appoint a Deal Captain Who’s Not You
Choose someone trusted to handle diligence, organize documents, and communicate with advisors. If you don’t have this person internally, consider hiring an M&A advisor who can run point. Your focus needs to stay on the shop floor.
Assume Buyers Are Watching Everything
From the day you sign the LOI, expect the buyer to analyze every shift in numbers, customer behavior, and process quality. Maintain discipline. Be consistent. Keep leading like you’re not selling at all.
Want full value for your business? Finish strong. Don’t just start the sale—earn the close.
Top 5 FAQs Manufacturing Owners Ask About Maintaining Performance Through a Sale
1. How much time should I realistically expect to spend on the sale process?
It varies, but most owners spend 10-20 hours a week once due diligence kicks off. The key is to delegate deal tasks so you can focus on running the business.
2. Should I tell my employees and customers about the sale right away?
Not necessarily. Keep it confidential unless disclosure is required or it helps secure key contracts. However, you should prepare leadership internally to maintain focus and performance.
3. What if an unexpected issue hits during diligence—how do I handle it?
Be transparent but proactive. Have facts ready, show your plan to resolve it, and keep communication clear with the buyer and your advisors.
4. Can performance dips after LOI ever be recovered in negotiations?
Sometimes, but it usually results in lower purchase price or tougher deal terms. It’s far better to avoid dips in the first place.
5. How do I balance managing daily operations with responding to buyer requests?
Set clear roles. Appoint a deal lead for buyer communications. Block out dedicated time for operations. Use your management team to share the load.
Closing Thought: Protect What You’ve Built Until the Deal Is Done
Selling your manufacturing business is one of the biggest financial and emotional events of your life. It’s tempting to focus only on the deal terms and the closing check. But the truth is the business you built needs your leadership as much now as ever.
If you want to protect the value, avoid surprises, and walk away with the deal you deserve, then keep your focus sharp. Run the business like you’re not selling at all, and you’ll increase your odds of a smooth, profitable close.
If you’re gearing up to sell, start today by putting your operational plan in place, appointing your deal captain, and communicating clearly with your team. The finish line is closer than you think—now make sure you cross it strong.