A practical, field-tested LOI framework built for chimney service company acquisitions — covering purchase price, technician retention, seasonal revenue earnouts, and SBA financing contingencies.
A Letter of Intent (LOI) is your first formal step toward closing a chimney sweep or repair business acquisition. It sets the price, structure, and ground rules for the deal before you invest in full due diligence. In the chimney sweep industry, a well-crafted LOI must address issues unique to trades businesses: owner-operator dependency, CSIA-certified technician retention, pronounced fall and winter seasonality, and the mix of asset classes that drive value — from customer databases and service routes to vehicles, inspection cameras, and vacuum systems. This guide walks you through every section of a chimney sweep LOI, with example language and negotiation notes tailored to the realities of buying a $500K–$3M revenue chimney service business. Whether you are financing with an SBA 7(a) loan, negotiating a seller note, or structuring an earnout tied to customer retention, this template will help you move from verbal agreement to signed LOI with confidence.
Find Chimney Sweep & Repair Businesses to AcquireParties and Business Identification
Identifies the buyer, seller, and the specific business entity or assets being acquired. For chimney sweep acquisitions, this section should clearly specify whether you are buying the operating entity (stock purchase) or the business assets (asset purchase), since most deals in this industry are structured as asset purchases to limit liability exposure from prior inspection or repair work.
Example Language
This Letter of Intent is entered into as of [Date] by and between [Buyer Name or Entity] ('Buyer') and [Seller Name] ('Seller'), the owner of [Business Legal Name], a [State] [LLC/Corporation] operating under the trade name [DBA Name] ('the Company'), providing chimney sweep, inspection, repair, and liner installation services in [Primary Service Area, e.g., the greater Nashville, TN metropolitan area]. This transaction is intended to be structured as an asset purchase unless otherwise agreed in writing by both parties.
💡 Confirm the exact legal entity name and DBA early — many chimney businesses operate under a different trade name than their LLC registration. Specify asset purchase explicitly to protect yourself from inheriting liability from prior fire incidents, carbon monoxide complaints, or code violations linked to inspections performed before your ownership.
Purchase Price and Valuation Basis
States the proposed total purchase price and the valuation methodology used to arrive at it. Chimney sweep businesses in the lower middle market typically trade at 2.5x–4.5x Seller's Discretionary Earnings (SDE). Price should be anchored to verified SDE, not top-line revenue, given the wide variation in owner compensation, vehicle expenses, and personal items run through the business.
Example Language
Buyer proposes to acquire substantially all assets of the Company for a total purchase price of [e.g., $875,000], representing approximately [e.g., 3.2x] the Company's trailing twelve-month Seller's Discretionary Earnings of [e.g., $273,000] as reported in the Company's 2023 tax return and profit and loss statement. This purchase price is subject to adjustment based on findings during the due diligence period, including but not limited to verification of revenue, add-backs, equipment condition, and customer database integrity.
💡 Do not accept the seller's SDE calculation at face value. Common add-backs in chimney businesses include owner salary above market replacement cost, personal vehicle expenses, family member wages, and one-time equipment purchases. Build in explicit language allowing price adjustment if SDE cannot be verified within 10% of the stated figure during due diligence.
Deal Structure and Payment Terms
Details how the purchase price will be funded, including the equity injection, SBA loan amount, seller note, and any earnout. Most chimney sweep acquisitions in this size range use SBA 7(a) financing, often paired with a seller note of 10–20% to bridge the gap between appraised loan value and purchase price.
Example Language
The proposed purchase price of [e.g., $875,000] shall be funded as follows: (i) Buyer equity injection of approximately [e.g., $87,500] (10% of purchase price); (ii) SBA 7(a) loan of approximately [e.g., $700,000] from [Lender Name or TBD], subject to lender approval and SBA authorization; and (iii) Seller promissory note of [e.g., $87,500] at [e.g., 6%] interest per annum, payable over [e.g., 5 years] in equal monthly installments, subordinated to the SBA loan per SBA standby requirements. The seller note shall be subject to a 24-month standby period if required by the SBA lender.
💡 Many chimney sweep sellers are unfamiliar with SBA standby note requirements. Explain early that the seller note may need to be on full standby for up to 24 months — this is non-negotiable with SBA lenders and sometimes kills deals when sellers expect immediate cash flow from the note. If the seller resists, explore increasing the equity injection or slightly reducing the note amount to reduce standby friction.
Assets Included and Excluded
Enumerates the specific assets being acquired, which in a chimney sweep business include vehicles, inspection cameras, vacuum systems, rotary cleaning equipment, customer database and CRM records, phone numbers, website, social media accounts, and any service agreements or maintenance contracts. Explicitly list excluded assets to avoid disputes at closing.
Example Language
The assets to be acquired shall include, but are not limited to: all service vehicles (listed on Schedule A with VINs, year, make, model, and mileage), chimney inspection cameras and video systems, rotary cleaning equipment and vacuum systems, spare parts inventory, the Company's customer database and CRM records (estimated [e.g., 1,200] active household records), all business phone numbers and call tracking numbers, the Company's website domain and social media accounts, any existing service agreements or annual maintenance contracts, the Company's trade name and goodwill, and all operating procedures and training materials. Excluded from this transaction are: [Seller's personal vehicle], [Seller's personal tools], [specific real property if applicable], and any accounts receivable generated prior to the closing date unless otherwise agreed.
💡 The customer database is often the single most valuable asset in a chimney sweep acquisition. Require the seller to warrant in the LOI that the database is accurate, complete, and contains at least [X] household records with documented service history. Also confirm that the business phone number is not attached to the seller's personal cell phone — this is a common operational issue in sole-operator shops.
Earnout Provisions
Defines any portion of the purchase price that is contingent on post-closing performance, typically tied to customer retention or first-year revenue. Earnouts are common in chimney sweep acquisitions when there is owner-operator dependency risk — they protect the buyer if customers leave after the seller's departure.
Example Language
In the event that the parties agree to include a performance-based earnout, an additional [e.g., $75,000] shall be payable to Seller within [e.g., 30 days] following the first anniversary of the closing date, contingent upon the Company achieving gross revenue of no less than [e.g., $620,000] during the twelve months immediately following closing and customer retention of no less than [e.g., 75%] of active households serviced in the trailing twelve months prior to closing, as measured by service visit records. Seller's cooperation obligations during the earnout period are defined in Section [X] of this LOI.
💡 Keep earnout metrics simple and tied to observable data points — revenue and customer retention are measurable from QuickBooks and CRM records. Avoid complex tiered earnouts that create disputes. If the seller pushes back on earnouts entirely, consider a lower base price with a larger seller note rather than a large earnout, since notes are easier to enforce than earnout disputes.
Due Diligence Period and Access
Establishes the length of the due diligence period and the specific items the buyer requires access to. For chimney sweep businesses, due diligence should cover financials, technician certifications, equipment condition, customer database quality, insurance history, and any liability claims related to prior inspections or fires.
Example Language
Buyer shall have [e.g., 45] calendar days following full execution of this LOI to conduct business, financial, legal, and operational due diligence ('Due Diligence Period'). During this period, Seller agrees to provide Buyer with timely access to: three years of federal business tax returns and monthly profit and loss statements; QuickBooks files or equivalent accounting records; complete customer database export with service history; copies of all technician CSIA and NFI certifications; vehicle titles and maintenance records; copies of all insurance policies including general liability and commercial auto; any outstanding claims, complaints, or litigation; all service agreements and maintenance contracts; and a complete list of current employees with tenure, compensation, and employment status. Buyer may extend the Due Diligence Period by [e.g., 15] days upon written notice to Seller if additional review is required.
💡 Request a CSIA certification status report for all technicians on day one. If the lead technician's certification has lapsed or if the owner is the only certified tech, flag this immediately — it is a material risk that may require price renegotiation or a longer transition period. Also request the business's insurance loss run report for the past 5 years to identify any fire-related liability claims.
Exclusivity and No-Shop Agreement
Prevents the seller from marketing the business to other buyers or entertaining competing offers during the due diligence and negotiation period. This protects the buyer's investment of time and money in due diligence.
Example Language
In consideration of Buyer's commitment to conduct due diligence and negotiate in good faith, Seller agrees that for a period of [e.g., 60] days following full execution of this LOI ('Exclusivity Period'), Seller will not, directly or indirectly, solicit, encourage, or entertain offers, inquiries, or negotiations from any other party regarding the sale, transfer, or recapitalization of the Company or its assets. Seller agrees to immediately notify Buyer in writing of any unsolicited third-party contact received during the Exclusivity Period. The Exclusivity Period may be extended by mutual written agreement of both parties.
💡 60 days is standard for SBA-financed deals given the lender approval timeline. If you are doing a cash purchase, 30–45 days is more appropriate. Some sellers will resist exclusivity beyond 30 days — in that case, tie the extension to demonstrated SBA lender engagement (e.g., a lender term sheet or application submission) rather than a fixed calendar date.
Transition and Training Period
Specifies the seller's post-closing obligations to train the buyer and ensure a smooth handover of customer relationships, operational knowledge, and technician management. This is one of the most critical sections in any chimney sweep LOI given the relationship-driven nature of the business.
Example Language
Seller agrees to provide Buyer with a transition and training period of no less than [e.g., 90] days following the closing date ('Transition Period'), during which Seller will: (i) introduce Buyer to key employees, subcontractors, and major customers; (ii) train Buyer on all operational systems including scheduling software, CRM, invoicing, and dispatch procedures; (iii) remain available by phone and email to assist with customer inquiries, technical questions, and employee matters for a minimum of [e.g., 20] hours per week for the first [e.g., 60] days, transitioning to an advisory role for the final [e.g., 30] days; and (iv) cooperate fully with any SBA lender requirements related to transition consulting. Compensation for the Transition Period shall be [e.g., $5,000 per month] or as otherwise agreed at closing.
💡 Do not accept a 30-day transition for a business where the owner has run all operations solo for 15+ years. Push hard for 90 days minimum — the fall busy season is when customer relationships are reaffirmed, and you want the seller present for at least one full peak season cycle. If the seller insists on a shorter transition, consider escrowing a portion of the purchase price contingent on transition completion milestones.
Non-Compete and Non-Solicitation Agreement
Restricts the seller from starting or joining a competing chimney sweep business or soliciting customers or employees after closing. Critical in a relationship-driven local service business where the seller's personal reputation drives most recurring revenue.
Example Language
As a condition of closing, Seller agrees to execute a Non-Competition and Non-Solicitation Agreement, the material terms of which are: (i) Seller shall not directly or indirectly own, operate, consult for, or be employed by any chimney sweep, fireplace inspection, chimney repair, or related home services business within a [e.g., 50]-mile radius of [Primary Service Area City] for a period of [e.g., 5] years following the closing date; (ii) Seller shall not solicit or attempt to solicit any customer, employee, or subcontractor of the Company during the same period; and (iii) these restrictions shall be subject to reasonable carve-outs for Seller's personal use of a fireplace in their own residence. The non-compete shall be allocated a portion of the purchase price for tax purposes as agreed by both parties.
💡 A 50-mile radius and 5-year term is standard and SBA-enforceable for a local service business. Some sellers will push for a shorter term or narrower geography — hold firm on the geography since chimney businesses often have customers spread across a broad area. Confirm that the non-compete extends to subcontractors the seller might use to operate a shadow business under a spouse or family member's name.
Closing Conditions and Timeline
Lists the conditions that must be satisfied before the transaction can close, including SBA loan approval, lease assignments, equipment inspections, and employee retention confirmations. Sets a target closing date.
Example Language
The closing of this transaction is conditioned upon: (i) satisfactory completion of Buyer's due diligence with no material adverse findings; (ii) SBA lender approval and issuance of a commitment letter for the loan amount specified herein; (iii) assignment or transfer of all material business licenses, permits, and certifications required to operate in [State/County]; (iv) written confirmation from [Lead Technician Name or 'the Company's lead CSIA-certified technician'] of intent to remain employed post-closing under terms acceptable to Buyer; (v) execution of a commercial lease assignment or new lease agreement for [address if applicable] acceptable to Buyer and landlord; and (vi) no material change in business operations, revenue, or employee status between the date of this LOI and closing. The parties target a closing date of on or before [e.g., 90] days from the execution of this LOI, subject to SBA lender timelines.
💡 Lead technician retention is a go/no-go condition in most chimney sweep deals — do not waive it. Have a direct conversation with the key technician before LOI execution if possible, or make a warm introduction a condition of early due diligence. If the technician is uncertain about staying, build a retention bonus funded at closing into the deal structure to lock them in.
Purchase Price and SDE Verification
The final purchase price must be anchored to verified SDE, not the seller's claimed earnings. In chimney sweep businesses, personal expenses — owner vehicle, family wages, personal cell phones, hunting licenses, and fuel for non-business use — are routinely run through the company. Require a full add-back schedule with documentation before finalizing price.
Seller Note Terms and SBA Standby Requirements
If using SBA financing, the seller note will likely be required to go on full standby for up to 24 months. Negotiate the note interest rate (typically 5–7%), amortization term (5–7 years), and standby terms upfront so the seller is not surprised at closing. A seller who expects immediate note payments will derail an SBA deal.
Customer Database Quality and Minimum Record Count
Negotiate a minimum warranty on the number and quality of active household records in the CRM. A chimney sweep business valued on recurring revenue must have a verifiable customer base. Define 'active' as a household serviced within the past 24 months, and require the seller to warrant the accuracy of service history records.
Lead Technician Retention and Employment Terms
The retention of one or more CSIA-certified technicians is the single biggest operational risk in a chimney sweep acquisition. Negotiate a retention bonus for the lead technician funded at closing, and include a seller obligation to facilitate employment conversations before due diligence ends. Consider tying a portion of the purchase price or earnout to technician retention through the first 12 months.
Equipment and Fleet Valuation and Condition Warranty
Service vehicles and inspection equipment are significant capital assets in a chimney sweep business. Negotiate a warranty on equipment condition and require a third-party mechanic inspection of all vehicles. Age, mileage, and maintenance history should inform a capital replacement reserve estimate that is factored into the final purchase price or allocated as a post-closing credit.
Non-Compete Geographic Scope and Duration
A 50-mile radius and 5-year non-compete is the standard floor for a chimney sweep acquisition. Sellers who operate in rural or suburban markets with limited competition may argue for a narrower radius — resist this, as your customer base may extend well beyond the seller's immediate market and the seller's personal relationships with customers are the primary asset you are protecting.
Transition Period Length and Compensation Structure
Ninety days is the recommended minimum transition period for chimney sweep businesses with significant owner-operator dependency. Negotiate that the seller introduces the buyer to every customer they personally service during the transition period. Structure transition compensation at a flat monthly rate to align incentives and avoid disputes over hourly billing.
Find Chimney Sweep & Repair Businesses to Acquire
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Chimney sweep businesses in the lower middle market typically sell at 2.5x to 4.5x Seller's Discretionary Earnings. Where a business lands in that range depends on several factors: whether the owner is the only certified technician (pushes toward the lower end), whether the business has a documented CRM with 500 or more active households (pushes toward the higher end), how diversified the revenue is across cleaning, inspection, repair, and liner installation, and whether the business has any service agreements providing recurring annual revenue. A business with employees, clean financials, and strong customer retention can justify a 3.5x–4.5x multiple. A solo-operator shop with no CRM and informal bookkeeping should trade at 2.5x–3.0x at best.
Almost always as an asset purchase. Chimney sweep businesses carry liability exposure from prior inspection and repair work — if an inspection was performed incorrectly before you owned the business and a fire or carbon monoxide event occurs after closing, you do not want to inherit that liability through a stock purchase. An asset purchase lets you acquire the customer database, equipment, vehicles, trade name, and goodwill while leaving prior liabilities with the seller. The only scenario where a stock purchase might make sense is if the business holds a critical license, permit, or government contract that cannot be transferred in an asset deal — and this is rare in residential chimney services.
Yes. Chimney sweep and repair businesses are SBA 7(a) eligible, and most lower middle market acquisitions in this industry are SBA-financed. A typical deal structure includes a 10% buyer equity injection, an SBA 7(a) loan covering 70–80% of the purchase price, and a seller note for the remaining gap. The SBA will require the seller note to be on standby for up to 24 months, which means the seller receives no note payments during that period. Lenders will want to see at least two to three years of tax returns showing consistent SDE, a viable business plan, and evidence that the business can support debt service from operating cash flow. Seasonal cash flow is a common lender concern — be prepared to explain how the business manages off-peak months.
This is the most common risk in chimney sweep acquisitions and should be addressed directly in both the LOI and the purchase agreement. First, negotiate a longer transition period — 90 to 120 days minimum — and require the seller to actively work alongside a technician who can be developed or certified. Second, build in a funded retention bonus for any current employees with CSIA or NFI certifications. Third, consider structuring part of the purchase price as an earnout tied to first-year revenue, which aligns the seller's financial interest with a successful transition. Fourth, before finalizing the LOI, engage directly with any existing technicians to assess their competence and willingness to stay. If the business has no employees and the owner is the sole tech, price that risk aggressively — this is a job purchase, not a business purchase, unless a hiring plan is part of the acquisition thesis.
Before signing, ask the seller for a summary of the customer database: total household count, number serviced in the past 12 months, number serviced in the past 24 months, and average annual visits per household. You are looking for a database of at least 500 active households with evidence of repeat annual visits — this is the foundation of the recurring revenue story. During due diligence, request a full CRM export and cross-reference it against invoicing records in QuickBooks to verify that customers are real, active, and paying. Watch for databases inflated with one-time customers, duplicate records, or households that have not been serviced in three or more years. The quality and size of the verified active customer base is the most important driver of business value in this industry.
A minimum of five years with a geographic radius of at least 50 miles from the primary service area is the standard for a chimney sweep acquisition. This may feel aggressive to sellers, but it reflects the reality that the seller's personal relationships with hundreds of households are the primary asset being acquired — and those relationships do not expire in two or three years. Courts generally enforce reasonable non-competes in business sale transactions more readily than employment non-competes, so a five-year term is both standard and defensible. If the seller insists on a shorter term, consider tying a portion of the purchase price to the non-compete duration rather than reducing the geographic scope, which is the more important protection.
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