Letter of Intent Template for Acquiring a Handyman Services Business

Buyer and Seller Identification

Establishes the legal identities of both parties. The buyer is typically an individual or newly formed acquisition entity (LLC or corporation). The seller is the current owner of the handyman business, often operating as a sole proprietor, S-Corp, or LLC.

💡 Confirm early whether this is an asset purchase or stock purchase. For handyman businesses, asset purchases are nearly always preferred by buyers to avoid inheriting hidden liabilities including worker misclassification claims, OSHA violations, or unresolved customer disputes. Sellers may prefer a stock sale for tax reasons — this gap is common and worth addressing at the LOI stage to avoid surprises later.

Purchase Price and Valuation Basis

States the total proposed purchase price and the basis on which it was calculated — typically a multiple of Seller's Discretionary Earnings (SDE) or EBITDA. Handyman businesses in the $1M–$3M revenue range typically trade at 2.5x–4x SDE depending on technician depth, recurring revenue, and owner dependency.

💡 Sellers in handyman businesses frequently overestimate SDE by including personal vehicles, family payroll, personal cell phones, and owner labor that won't transfer. Buyers should request a detailed add-back schedule before the LOI is signed. If SDE is above $500K and the business has at least 2–3 employed technicians, you are in the sweet spot for SBA financing. If add-backs are excessive or unverifiable, consider proposing a price contingent on CPA-verified financials.

Deal Structure and Payment Terms

Describes how the purchase price will be funded — typically a combination of buyer equity, SBA 7(a) loan proceeds, seller financing, and potentially an earnout. Handyman acquisitions commonly involve seller notes to bridge appraisal gaps and demonstrate seller confidence in business continuity.

💡 SBA lenders will require the seller note to be on full standby for at least 24 months if it is being used as part of the equity injection. Sellers sometimes resist seller notes because they want a clean exit — address this by explaining the seller note signals confidence and is standard in handyman business sales. If the business has significant 1099 worker exposure, buyers should request an escrow holdback of 5–10% of the purchase price for 12–18 months to cover any worker classification claims that surface post-close.

Earnout Provisions

Defines performance-based payments tied to post-close revenue or EBITDA milestones. Earnouts are common in handyman acquisitions when the seller's relationships or field skills are central to near-term revenue, or when buyer and seller disagree on sustainable earnings.

💡 Earnouts work best in handyman businesses when tied to gross revenue rather than EBITDA, since post-close operational changes (new hires, marketing spend) can distort margins in ways the seller cannot control. Sellers should negotiate earnout language that specifies how revenue is measured and what happens if the buyer makes strategic changes that suppress revenue artificially. Limit earnout periods to 12–24 months — longer periods increase dispute risk significantly.

Due Diligence Period and Access

Defines the length of the due diligence period and what information the seller must provide. For handyman businesses, due diligence is heavily focused on worker classification, licensing compliance, customer concentration, and revenue repeatability — not just financial statements.

💡 The worker classification audit is the single most consequential due diligence item in handyman acquisitions. Request IRS Form 1099s issued for the past 3 years, state unemployment filings, and any prior audits or agency correspondence. If the business uses primarily 1099 contractors in a state like California, Massachusetts, or New Jersey with strict ABC tests, this is a material liability that must be priced into the deal or resolved pre-close. Also verify that Google Business Profile ownership can be transferred — this is frequently overlooked and can cause significant post-close headaches.

Exclusivity and No-Shop Period

Grants the buyer an exclusive negotiating window during which the seller cannot solicit or entertain other offers. This protects the buyer's investment in due diligence and deal preparation.

💡 60 days is standard for handyman business acquisitions when SBA financing is involved, as SBA lender underwriting alone can take 30–45 days. If the seller is concerned about a long exclusivity period, offer a shorter initial period (45 days) with an optional 15-day extension triggered by buyer's good-faith submission of a complete SBA loan application. Sellers should resist open-ended exclusivity without a hard termination date — it removes all seller leverage if the buyer stalls.

Key Man Transition and Seller Consulting Obligations

Defines the seller's post-close role, typically a paid consulting or employment period to facilitate transition of customer relationships, employee management, and operational knowledge. This is one of the most critical sections in a handyman business LOI given typical owner dependency.

💡 Tying seller note payments to transition performance is one of the most effective ways to ensure seller engagement post-close. Be specific about hours required and deliverables — vague transition language leads to disputes. If the seller is also the primary estimator, extend the transition period and consider having the seller shadow and train a lead technician or the buyer personally on estimating workflows before close. Sellers who built the business on personal relationships will often underestimate how long it takes to transfer customer trust — plan for this honestly.

Non-Compete and Non-Solicitation

Prevents the seller from starting a competing handyman business or recruiting employees and customers after the sale. Critical in handyman services given that the seller's personal brand and technician relationships are the core transferable assets.

💡 Handyman businesses are deeply hyperlocal, so a 25–50 mile radius is appropriate and defensible in most jurisdictions. Courts are more likely to enforce non-competes that are geographically specific and tied to the actual service area rather than broad state-level restrictions. Sellers with adult children or spouses who work in trades should ensure the non-compete does not inadvertently bind family members who were not part of the business — address this explicitly in the agreement language.

Conditions to Closing

Lists the conditions that must be satisfied before the transaction can close. For handyman businesses using SBA financing, lender approval is a standard condition. Additional conditions specific to the industry include licensing transfers and insurance verification.

💡 The employment retention condition for key technicians is often overlooked in LOIs but is critical — losing your top technician the week after closing can destroy value. Consider offering technician retention bonuses funded at close, structured as 6-month employment agreements with a bonus paid at the 6-month mark. Material adverse change clauses should specifically reference loss of a major property management contract or departure of more than one technician as triggering events, given how concentrated handyman revenue can be.

Confidentiality

Binds both parties to keep the terms of the LOI and all due diligence information confidential. Particularly important in handyman businesses where employee and customer knowledge of a pending sale can accelerate attrition.

💡 Premature disclosure of a handyman business sale is one of the most common deal killers in this industry. Employees worry about job security and may start looking for other work. Top technicians are in high demand and will receive competing offers quickly once word spreads. Sellers should particularly resist disclosing the sale to employees until after a purchase agreement is signed and SBA financing is committed — ideally no more than 2–4 weeks before close. Plan the employee announcement carefully as a joint buyer-seller communication.