Letter of Intent Template & Negotiation Guide for Acquiring an Overhead Door & Gates Business

Purchase Price and Valuation Basis

State the total proposed purchase price, the EBITDA or SDE figure used as the valuation basis, and the multiple applied. For overhead door and gate businesses, clearly distinguish whether the multiple reflects a recurring-revenue-weighted business or a mixed installation and service model. Specify whether the price is subject to a working capital adjustment at close.

💡 Overhead door businesses often carry wide variance in SDE depending on how aggressively the owner has added back personal vehicle use, family payroll, and discretionary spending. Push to define the add-back schedule in the LOI or as an attachment so there's no ambiguity entering due diligence. If a significant portion of revenue comes from commercial accounts or a home builder relationship, note that the multiple should reflect that concentration risk. Sellers should resist accepting a valuation that lumps one-time installation revenue at the same multiple as recurring contract revenue — the latter deserves a premium and should be broken out explicitly.

Asset vs. Entity Structure

Specify whether the deal is structured as an asset purchase or a stock/equity purchase. The vast majority of lower middle market overhead door and gate acquisitions are structured as asset purchases, which allows the buyer to step up the tax basis and exclude unknown liabilities. Name the specific assets being acquired and any excluded assets.

💡 Fleet and equipment valuation is a common sticking point in overhead door deals. Buyers should require a full fleet schedule with year, make, model, mileage, and estimated current value before the LOI is finalized, or at minimum before the exclusivity period begins. Sellers with aged trucks or equipment should address this proactively — deferred capex on a fleet of service vans can meaningfully reduce the effective enterprise value. If the seller owns the shop or yard, a triple-net lease at a fair market rate is standard; negotiate the initial lease term, renewal options, and any right of first refusal to purchase in the LOI.

Deal Structure and Financing Sources

Outline how the purchase price will be funded, including SBA 7(a) loan proceeds, buyer equity injection, seller note, and any earnout component. SBA lenders will require specific seller note subordination language, so the LOI should reflect the intended capital stack accurately.

💡 SBA lenders for overhead door and gate acquisitions will scrutinize service contract renewal rates, fleet condition (as a collateral component), and owner dependency. If the business relies heavily on the seller for estimating commercial jobs or managing builder relationships, the lender may require a longer seller transition period or a consulting agreement as a condition of funding. Sellers should understand that during the SBA standby period, they will not receive seller note payments — this should be factored into personal financial planning. Buyers should avoid over-leveraging by understating working capital needs; parts inventory and seasonal cash flow gaps in slower months require adequate operating reserves.

Earnout Provisions

Define the structure, metrics, measurement period, and payment terms for any earnout component. In overhead door and gate acquisitions, earnouts are most commonly tied to service contract retention rates or total revenue thresholds in the 12–24 months following close.

💡 Sellers should negotiate earnout metrics that are within their control — specifically, avoid earnouts tied to net income or EBITDA post-close, as cost allocation decisions by the new owner can artificially suppress those figures. Contract revenue retention is a cleaner metric. Buyers should define clearly what counts as a service contract — a written agreement with scheduled maintenance visits is very different from an informal repeat customer relationship. Both parties should agree in the LOI on how new contracts signed post-close are counted and whether the seller gets credit for them during the earnout measurement period.

Due Diligence Period and Access

Define the length of the due diligence period, what access the buyer will receive, and the conditions under which the buyer may terminate without penalty during this window.

💡 Forty-five days is appropriate for most overhead door and gate acquisitions in the $1M–$5M range. Buyers with SBA financing should build in a buffer — SBA appraisals on commercial equipment and fleet can take 2–3 weeks alone. Use the due diligence period to physically inspect every service vehicle, audit a sample of service contracts for actual activity and renewal history, and speak directly with any manufacturer reps regarding dealer agreement transferability. Some LiftMaster, Clopay, or Wayne Dalton dealer agreements require franchisor or manufacturer consent to assign — confirm this early.

Exclusivity and No-Shop Period

Establish the period during which the seller agrees not to solicit or entertain offers from other buyers while the transaction is under negotiation.

💡 Sixty days is reasonable for SBA-financed deals because the lender timeline alone often consumes 45 days. Sellers should push back on exclusivity periods longer than 60–75 days without meaningful deposit or evidence of financing pre-approval. If the buyer has not already received an SBA pre-qualification or term sheet, sellers in this industry are well-advised to require proof of lender engagement as a condition of exclusivity. Buyers should use this period efficiently — do not begin exclusivity before you have a committed lender and a signed NDA in place.

Transition and Seller Consulting Agreement

Define the seller's post-close role, compensation during transition, duration of support, and any restrictions on re-entry into the market through non-compete provisions.

💡 Owner dependency is the single biggest valuation risk in overhead door and gate businesses. If the seller handles all commercial estimating and key account management, a 90-day transition is insufficient — push for 12 months with meaningful engagement requirements. Sellers should ensure the consulting fee is fair compensation and not a disguised way to reduce the purchase price. Non-compete radius and duration must be reasonable under state law; most SBA lenders will require a non-compete as a loan condition regardless. Sellers should confirm non-compete terms do not inadvertently restrict them from investing in or advising unrelated businesses.

Employee Retention and Key Personnel

Address the buyer's intentions regarding existing employees, identify any key personnel whose continued employment is material to the transaction, and outline any retention arrangements to be put in place before or at close.

💡 Technician retention is a critical diligence item in this industry. Trained overhead door and gate technicians — particularly those certified for commercial rolling steel and automated gate systems — take 12–18 months to develop internally. If one or two senior technicians represent the majority of billable capacity, their departure post-close can materially impair the business. Buyers should conduct informal conversations with key technicians as part of diligence (with seller permission) to gauge their sentiment about a transition. Sellers should proactively address this by framing the sale positively with long-tenured staff and avoiding any workforce disruptions in the 90 days prior to close.