Bottom Line Financial Management Services @bottomlinefms

The deal closed. The wire cleared. The buyer had the keys. And then the seller started trying to destroy the business. That sounds dramatic, but I’ve seen versions of this happen more than once. One client bought a business and, three months after closing, got a call from an angry customer. The customer said a job had been done poorly and wanted it fixed. The buyer searched the system. Nothing. No job file. No record. No invoice. So they asked the customer to send over the purchase order or invoice. The customer did. And that’s when the buyer realized the problem. This was not a job the buyer had done. It was a job the seller had done after closing. As it turned out, the seller had not been honoring the non-compete. He was still running around town doing jobs. Competing. Soliciting customers. Talking to employees. Actively undermining the buyer. The buyer called a litigator. The answer was painful but honest: Yes, you may have a claim. Yes, the seller may be violating the purchase agreement. But enforcing this is going to be expensive. Probably north of $100,000. It will require facts, evidence, time, and litigation. So you need to decide: Is this an existential threat to the business? Or is this something you handle by putting your head down, outworking the seller, and moving forward? That is a brutal decision for a buyer to make three months after closing. But it happens. Another buyer bought a business that relied heavily on an Amazon seller account. The account had 4,500 five-star reviews. According to Amazon consultants, that account represented millions of dollars of enterprise value. The problem? The account was still in the seller’s name. The seller claimed he tried to transfer it and Amazon said it was not possible. The buyer’s consultants were hearing something different. The seller was going to turn it off. So the buyer went to court and obtained an injunction requiring the seller to keep the account open and continue cooperating. The key provision? Further assurances. A boring-sounding covenant in the purchase agreement that suddenly became one of the most important provisions in the entire deal. Another buyer could not get the point-of-sale system transferred after closing. For the first six weeks, the buyer could not properly accept payments. Meanwhile, the seller was telling customers and employees that the buyer would be out of business in six months and that he would buy the company back out of bankruptcy. Again, the question became: What does the purchase agreement say the seller has to do? What does it prohibit the seller from doing? What cooperation is required after closing? What happens when the seller refuses? This is why covenants matter. Non-competes. Non-solicits. Non-disparagement. Confidentiality. Transition assistance. Further assurances. Post-closing cooperation. These are not just filler provisions that lawyers throw into the back half of a purchase agreement. They are the rules of the road after closing. And when something goes wrong, they may be the only source of leverage the buyer has. A lot of buyers think the deal is over when the documents are signed and the money moves. It is not. In many deals, closing is just the moment when the buyer finds out whether the seller is actually going to cooperate. Sometimes they do. Sometimes they don’t. And when they don’t, the covenant section of the purchase agreement can become very real, very fast. That’s what the latest episode of Main Street Deals covers. Because covenants are not boilerplate. They are the buyer’s post-closing protection plan. Enjoy!

SMB Law Group @smblawgroup

5 days ago

A seller who walks away with the relationships, the know-how, and the freedom to compete can quietly undo everything you just paid for. @SMB_Attorney and @KHendersonCo explain why a well-drafted non-compete is the difference between owning a business and renting its current

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Most SBA deals don’t fall apart because of "major issues" after they're committed. They fall apart because nobody paid attention to the little issues early enough. It’s usually death by ignored details.

Yeah… The SBA is a federal agency of the United States government. Being dishonest with the feds is… Well… Not recommended. This is legal advice.

Bruce Marks, MBA, CM&AA @sbabmarks

a month ago

Yesterday, I shared live with about 32 Searchers this: Off the books cash (yes, I saw this on a Broker’s CIM) is NOT an addback! Remember, the SBA, is the sister of the IRS Unreal😳

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Co-sign

Alan Peterson SBA @AlanPetersonSBA

a month ago

Deal team matters, and the earlier you put the right people in the right place, the better. Financial due diligence, legal, business plan/projections? I count the pre-close out of pocket expense toward your equity injection. Don’t wait! Need referrals? DM me, happy to help.

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This is so true. A very “eye opening” time for a seller/business owner

Eric Hsu @lawyer4SMBs

a month ago

7 things sellers don't know about their own business until you ask them in diligence: 1. The actual revenue split by customer 2. Which customers are growing vs. shrinking 3. What gross margin really is by product line 4. How much of the team is genuinely cross-trained 5. How

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7 things sellers don't know about their own business until you ask them in diligence: 1. The actual revenue split by customer 2. Which customers are growing vs. shrinking 3. What gross margin really is by product line 4. How much of the team is genuinely cross-trained 5. How dependent the business is on the owner's relationships 6. What the working capital cycle actually looks like in cash, not on paper 7. Which vendor terms are personal favors and which are written contracts The seller built it. He didn't measure it. Asking these questions isn't an attack. It's the first time anyone's ever made him think about it. That's how trust gets built in diligence. Not by hiding the questions.

Electrical acquisitions are continuing to pick up in the skilled trades space. HVAC and plumbing remain strong, but electrical and even painting businesses are showing up more on my desk. What industries are you watching closest right now?

Most taxpayers already receive their tax refunds electronically via direct deposit. If you’ve been getting paper checks, the #IRS encourages you to leave paper behind and provide accurate bank or prepaid debit card information when filing. Learn more at: ow.ly/J5LW50Y4q49

Very true!

Jerry Freedman, CEO - Freedom Business Financing @SBAdealCloser

4 months ago

Something that can be used as a learning experience from the SBA roller coaster SOP changes and procedural notices in the last 1-2 years: SBA financing looks stable until it isn’t. Rules change. Policy shifts. Deals break. If your structure only works under today’s

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March 7: SBA declares any business that isn’t 100% owned by a US citizen / Legal Permanent Resident ineligible for SBA financing. December 19th: after listening to the feedback of the small business community, SBA rolls out policy that walks back this hard stance, now allowing up to 5% of the business to be owned by visa-holders. Feb 2: SBA reverses the walk back and takes the original stance even further. Effective Mar 1, businesses must be 100% owned by US citizen/US national to be eligible for SBA. Green Card Holders are now banned — a wild policy that came out of nowhere with no explanation. This latest policy notice bans any business with even a 1% stake from a US Permanent Resident (aka Green Card Holder) from receiving SBA financing. This is obviously hyper-political. I feel bad for the career government offficals that have to deal with this. This will ultimately be reversed. It’s just a matter of when.

It's a big day for bank deals as four mergers and acquisitions involving Texas-based banks all closed. bizjournals.com/houston/news/2…

We’ve completed our acquisition of @ComericaBank, creating the ninth-largest bank in the nation. Learn more: go.53.com/6011hEZxZ

I may hurt some feelings here, but if your SBA Personal Financial Statement is so weak that you feel the need to plug in an arbitrary value for a business or some other asset you own just to boost your asset holdings and net worth, that number does not actually help you. It does the opposite. It signals that you do not understand how SBA underwriting works and are trying to manufacture strength where there is none. In SBA lending, what actually matters on a PFS is surprisingly narrow. Liquidity matters because it determines whether you can fund the equity injection and meet post-close liquidity requirements. Real estate matters because lenders need to understand what collateral exists and whether it is available or already pledged. Liabilities matter as well, because debt load and fixed obligations affect cash flow durability. Verifiable income matters because it shows your ability to support the loan and absorb stress. Those items drive real credit decisions. Everything else is largely noise. Inflated business values, vague ownership interests, or hand-wavy estimates that cannot be substantiated do not improve a file, even if they make you feel better. Underwriters know those numbers are unreliable, and they are not giving you credit for them anyway. At best, they ignore them. At worst, they start questioning the credibility of the entire package. Beyond those items, the most important characteristic of an PFS is that it is accurate and complete. Clean disclosures, realistic values, and consistency with tax returns and credit reports go much further than trying to make the balance sheet look impressive. A boring but honest PFS will always outperform a creative one. In SBA lending, strength is not about looking rich on paper. It is about showing you can actually close the deal, survive the early months post-acquisition, and stand behind the loan if things do not go perfectly. Everything else is just hogwash.

Let’s go! ** Courtesy of a friend who is not on X

Do not ever form an entity in California.

We are headed toward a government shutdown. Again. Here is what that actually means for your SBA 7(a) loan. If your loan already has an SBA PLP authorization number, nothing changes. Your deal can still close. If you do not yet have a PLP number, you cannot obtain one during a shutdown. That means your closing waits until the government reopens. That is the whole story. This is why timing, preparation, and execution matter in SBA lending. Getting to authorization early is not a nice-to-have. It is risk management. If you are under LOI or heading that way and want to make sure your deal is positioned to close cleanly, happy to be a resource.

🏦🚫With another government shutdown now highly likely after the end of this month, if you have an SBA loan in process you need to ask your bank if your loan has been submitted to SBA for the final loan number yet. If not, ask what exactly they need from you to be able to submit in the next day or two. If your loan does not get the SBA approval number this week, your loan funding will be delayed until the government re-opens (indefinitely). This will also be disruptive to bank's internal processes regardless of what stage your loan is in. Clear communication and responsiveness to bank "needs lists" this week is critical to getting your loan closed on time.

I can’t tell what’s more entertaining, the NFL/NCAA coaching carousel or the SBA BDO carousel.

Apple Card, coming to Chase. bit.ly/3N8fHXg

Solid advice here from @SellersCounsel!

Dallin Drescher @SellersCounsel

5 months ago

PSA, if you’re under LOI, order a tax clearance certificate from your home state now. You’ll probably need to update before closing, but it’ll give you time to address any issues. Plus, it’s usually faster to get the second one.

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