Closing and the first 100 days: day-one plan, communications, cash control and investor updates
Close with consents, insurance, banking and a communication plan ready; then spend the first 100 days learning the business, protecting customers and employees, getting weekly cash visibility, using the seller's transition time well, and reporting to lenders and investors on a fixed schedule before you make major changes.
Key takeaways
- The plans below are common practice rather than a rule or a study. The point is to learn before you change anything.
- Under SBA rules in an initial acquisition, the seller can stay only as a consultant for up to 24 months in total, so plan the handover around that.
- Minority equity investors used toward the SBA equity injection can receive only tax distributions until the 7(a) loan is paid off, and a standby seller note receives no payments for the life of the loan. Build your cash plan around those limits.
- Report to investors and lenders on a schedule you set. Silence is what damages trust.
Before closing: the readiness list
Most first-week problems are preventable in the last two weeks before closing. Work through the list below with your lawyer, the seller and your lender, and track each item to done.
- Consents and notices: landlord, key customers, licensors, insurers and lenders have signed or been informed as the agreements require.
- Insurance: general liability, property, workers' compensation, cyber and key-person or life cover as your lender requires, bound effective at closing.
- Banking: new accounts or signatory changes ready; payment processing and merchant accounts updated; online banking access plan.
- Payroll and benefits: provider, tax registrations and employee enrollment set for the change of ownership.
- Systems: administrator access to accounting, customer, email, website, domain, social and software accounts, held by you rather than by one person.
- People: an agreed message for the team, key employee conversations done, and offer letters ready in an asset deal.
- Funds flow: reviewed line by line and agreed by buyer, seller and lender.
- Documents: purchase agreement, seller note and standby agreement, non-compete, consulting agreement, loan documents, guaranties, assignments.
- Post-closing calendar: working capital true-up date, escrow release date, first note and loan payments, tax filings and lender reporting dates.
Day one and week one
On day one, people look at you to decide whether to trust you. Keep the plan simple: say what is not changing, thank people, and answer questions honestly. Do not announce a strategy, a reorganization or price changes.
| When | Action | Why |
|---|---|---|
| Morning of day one | Meet all employees together with the seller. Share the announcement below. Answer questions. | People hear it from you, with the seller's endorsement |
| Day one | Call or visit the top customers with the seller; send the customer letter to others | Protects the largest relationships first |
| Day one | Confirm bank access, payroll run, insurance certificates and key vendor accounts | Keeps the business operating without interruption |
| Days two to three | One-on-one conversations with each direct report and key employee | Learn roles, concerns and who holds what knowledge |
| Days three to five | Visit top suppliers and the landlord with the seller | Protects supply and the premises |
| End of week one | Review cash: bank balances, receivables due, payables due, payroll | Establish cash visibility early |
| End of week one | Send first update to investors and lender | Sets the reporting rhythm |
Employee announcement template
Adapt this and read it aloud with the seller present. Replace brackets with true details.
Good morning, everyone. [Seller name] has built [Company] over [number] years, and you are a big part of why it is respected by customers. Today [Seller name] has completed the sale of the company to me, [Your name]. I want to tell you what is staying the same. Your jobs, your pay and your benefits are not changing. Our customers, suppliers and locations are staying the same. [Seller name] will be [working with me / available as a consultant] for [period] to make this transition smooth. What I will be doing in the first months is listening. I will meet each of you to hear how things work, what you are proud of and what gets in the way. I will not be making major changes until I have done that. A little about me: [two or three true sentences about your background and why you wanted this company]. I have time now for your questions, and I will be around all week. Thank you for what you do every day.
Customer and vendor letter templates
Send these by email on day one, after phone calls to the largest accounts.
CUSTOMER LETTER Subject: [Company] has a new owner: nothing changes for you Dear [Customer name], I am writing to let you know that [Seller name] has sold [Company] to me. I am [Your name], and I plan to run the company for the long term. Your contacts, your pricing terms, and your service levels are staying the same. [Seller name] will remain available to help with the transition for [period]. If you have any questions, please call me directly at [phone]. Thank you for your business. I would like to meet and hear what matters most to you. Sincerely, [Your name] --- VENDOR LETTER Subject: Change of ownership at [Company] Dear [Vendor name], [Company] has a new owner as of [date]. Orders, payment terms and contacts remain as they are. Please send invoices to [address/email]. If you need updated tax or banking details from us, please write to [contact]. Thank you for your support of [Company]. [Your name]
The 30, 60 and 100 day plans
These are suggested priorities, not a standard. Adjust them to your business. The sequence matters more than the dates: first understand, then stabilize, then improve.
| Period | Focus | Actions |
|---|---|---|
| Days 1 to 30 | Learn and protect | Meet every employee, top customer and supplier; review last 12 months of financials by month; set up a weekly cash report; document who does what; confirm every promise the seller made to staff and customers |
| Days 31 to 60 | Stabilize and see | Complete a first monthly close and variance review; map the sales process and delivery process; identify the three biggest risks (people, customers, cash); agree roles with key employees; start a simple monthly dashboard |
| Days 61 to 100 | Choose a few improvements | Pick two or three improvements that do not need a reorganization (pricing review, collections, a hiring gap, a quick cost fix); write a 12 month plan and budget; present it to the board or lender; review the seller's transition plan |
Cash control: the 13-week cash flow
A 13-week cash flow forecast shows cash in and out week by week for a quarter. It is the simplest tool to prevent a cash surprise. Build it in a spreadsheet and update it weekly with actuals. Use the layout below; the financial modeling resources include related templates.
13-WEEK CASH FLOW (rows) by WEEK 1 to WEEK 13 (columns) Opening cash CASH IN Collections from customers (by aging bucket) Other receipts (deposits, refunds) Total cash in CASH OUT Payroll and payroll taxes Rent and utilities Suppliers and materials Insurance Sales and other taxes Debt service: senior loan (principal + interest) Debt service: seller note (zero if on full standby) Owner pay Capital expenditure Professional fees Total cash out Net cash flow Closing cash Minimum cash target (for example, two weeks of payroll and fixed costs) Cushion above target Each Monday: replace the last week's forecast with actuals, roll the forecast forward by one week, and note the three largest variances.
Working with the seller during the transition
The seller's knowledge is an asset you paid for. Use it with a plan. Agree a calendar of introductions, a list of processes to document, and regular check-ins. In an SBA Initial Acquisition, the seller cannot be an employee or officer, and their consulting is limited to 24 months in total including extensions, so use the time actively in the first months.
- Week one: joint visits to top customers and suppliers.
- First month: weekly one-hour meeting to review open items and decisions.
- Documenting: the seller records how pricing, estimating, special customers and exceptions work.
- Boundaries: the seller does not give instructions to staff. Questions go through you.
- End of term: a written handover and a final customer call list.
Financing constraints that affect your plan
If you used an SBA 7(a) loan, several SOP provisions shape your first year. A seller note on full standby receives no payments of principal or interest for the life of the 7(a) loan. Minority equity investors whose investment counted toward the equity injection cannot receive distributions other than for their tax obligations until the 7(a) loan is paid off. The lender may include debt service coverage covenants in the loan agreement or investor agreements to make sure the company has enough cash flow for distributions beyond tax distributions. Keep a calendar of these and check each distribution against them before it is paid. If a payment, covenant or reporting date is at risk, tell the lender before the date, not after.
Investor and lender update template
Send this monthly in the first year. Keep it short and honest.
Subject: [Company] monthly update: [Month Year] Headline (2 lines): [one sentence on how the month went; one sentence on what changed] Numbers - Revenue: $[ ] vs budget $[ ] vs last year $[ ] - Gross margin: [ ]% | EBITDA: $[ ] vs budget $[ ] - Cash at month end: $[ ] | Minimum target: $[ ] | Debt service coverage (trailing 12 months): [ ] - Receivables over 60 days: $[ ] | Backlog or pipeline: $[ ] People - Headcount: [ ] | Departures/hires: [ ] | Key employee concerns: [ ] Customers - Top 5 customers status: [ ] | Wins/losses: [ ] What went well: [two specific items] What did not: [two specific items, with what I am doing] Decisions I need or help I would like: [introductions, advice, approvals] Next 30 days: [three goals] Covenant and compliance check: [loan covenants met? distributions within limits? next lender report due date] Thank you, [Your name]
Common mistakes in the first 100 days
- Changing too much too soon, before you understand why things are done the way they are.
- Skipping the one-on-ones with employees, so key people hear rumors.
- Letting the seller drift away early because the relationship is awkward.
- Not building weekly cash visibility until a problem appears.
- Paying distributions or note payments that the loan or standby agreement does not allow.
- Going quiet with investors and lenders when results are mixed.
- Taking too little pay, then burning out; or taking too much, then straining cash.
Day 100 review template
At day 100, take a day away from the business and answer the questions below in writing. Share the output with your board or lender.
DAY 100 REVIEW 1. What I learned that I did not know at closing (five bullets) 2. Where the business is stronger than I thought 3. Where it is weaker 4. Cash: opening balance $__, current $__, 13-week low point $__ in week __ 5. Debt service coverage trailing 3 months: __; loan covenants status: __ 6. People: who is critical, who is at risk, who needs development, roles to fill 7. Customers: top five status; any at risk; wins in the period 8. The seller transition: what has been handed over, what remains, end date 9. The three improvements I will make in the next 100 days, with owner, measure and date 10. Decisions I need from investors or lender 11. What I will stop doing or not do
Metrics to track from week one
- Cash balance and 13-week forecast low point.
- Revenue, gross margin and EBITDA versus budget and prior year.
- Debt service coverage on a trailing 12-month basis.
- Receivables aging and collections.
- Backlog, pipeline or recurring revenue, depending on the business.
- Customer concentration and top-customer health.
- Headcount, turnover and open roles.
- Safety, quality or service metrics specific to the industry.
Hard conversations
Every new owner has to handle a few awkward situations. A few principles help: be direct, be fair, document what you decide, and involve your lawyer before ending anyone's employment.
- A key employee who asks for a raise right after closing: listen, ask for their view of their role, and decide on facts after you have seen the numbers, not in the first week.
- A customer who asks for a price cut because the owner changed: ask what they need, restate the value, and avoid broad concessions you have not costed.
- A seller who gives instructions to staff after closing: remind them of the agreed role privately and restate it to the team.
- An underperforming employee: use the 100 days to observe and give feedback before acting, unless there is a safety or integrity issue.
- Pressure from investors for quick results: agree on milestones and reporting rather than ad hoc changes.
Insurance and risk review
Insurance policies often change at closing. Review them with a broker in the first 30 days and again at 100 days.
- General liability and property coverage that matches the new ownership and locations.
- Workers' compensation and employment practices coverage, where available.
- Key-person or life insurance, as your lender's credit analysis requires. The SOP requires the lender to address life insurance, including on whom and how much, or why none is required.
- Cyber coverage for businesses that hold customer data.
- Any coverage the purchase agreement requires you to keep for the seller's benefit.
- A calendar of renewal dates.
Frequently asked questions
Usually nothing, other than cash visibility. Spend the first 30 days learning. Choose a small number of improvements by day 100, and make sure each has an owner, a measure and a date.
Set a schedule at closing, such as monthly for the first year, and keep to it. Add an immediate note whenever something material changes, such as losing a major customer.
Not as an officer, director, stockholder or employee in an SBA Initial Acquisition under SOP 50 10 8.1. The seller may be a consultant for up to 24 months in total. Other structures and owner buyouts follow different rules.
Sources
Last reviewed . General information, not legal, tax or financial advice.
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