A structured LOI framework built for aquatic business acquisitions — covering purchase price, enrollment-based contingencies, facility lease assumptions, instructor retention, and SBA financing terms specific to the swim school industry.
A Letter of Intent (LOI) is the foundational document in a swim school acquisition. It signals serious buyer intent, establishes the key economic and structural terms of the deal, and creates a framework for due diligence and final purchase agreement drafting. For swim school acquisitions, a well-crafted LOI must go beyond generic business purchase language to address industry-specific risks: enrollment churn, pool lease continuity, instructor dependency, seasonal revenue patterns, and aquatic safety compliance. Whether you are acquiring a single-location independent school doing $400K in SDE or a multi-location operation with a waitlist of 300 families, your LOI should reflect the true value drivers and risk factors unique to aquatic instruction businesses. This guide walks through each major LOI section with swim-school-specific example language, negotiation considerations, and common pitfalls to avoid before you move into formal due diligence and purchase agreement negotiation.
Find Swim School Businesses to AcquireParties and Transaction Overview
Identifies the buyer entity, seller entity, and the business being acquired. For swim schools, specify whether the acquisition includes the legal entity (stock or membership interest purchase) or only the assets of the business (asset purchase). Most swim school acquisitions are structured as asset purchases to avoid assuming unknown liabilities, particularly those related to past aquatic safety incidents or unresolved parent disputes.
Example Language
This Letter of Intent is entered into between [Buyer Name or Entity], a [state] [LLC/Corporation] ('Buyer'), and [Seller Name or Entity], owner of [Swim School Name], a swim instruction business located at [Address] ('Business'). Buyer proposes to acquire substantially all of the assets of the Business, including the trade name, enrolled student roster, curriculum and instructional materials, equipment, goodwill, and assumption of the facility lease, as further described herein. This LOI does not include the assumption of any pre-closing liabilities, including any pending or threatened litigation related to aquatic safety incidents.
💡 Sellers who operate as an S-Corp or LLC often prefer a stock sale for tax efficiency, but buyers should push for an asset purchase to get a stepped-up basis and avoid inheriting pre-close liability. If the seller insists on a stock sale, build in a comprehensive representation and warranty package covering safety incident history. Clarify upfront whether the real estate (if owned) is included or will be handled through a separate lease-back arrangement.
Purchase Price and Valuation Basis
States the proposed purchase price and the methodology used to arrive at it. Swim school valuations are typically based on a multiple of Seller's Discretionary Earnings (SDE) or EBITDA, ranging from 3x to 5.5x depending on enrollment stability, waitlist strength, lease quality, and revenue mix. Clearly anchor the price to a specific SDE figure and multiple so both parties understand what adjustments may occur during due diligence.
Example Language
Buyer proposes a total purchase price of $[X], representing approximately [3.5–4.5]x the Business's trailing twelve-month Seller's Discretionary Earnings of $[Y], as reported in seller-provided financial statements for the period ending [Date]. This purchase price assumes verified active enrollment of not fewer than [number] students, monthly recurring revenue of not less than $[amount] from auto-pay billing programs, and SDE calculated after adding back owner compensation of $[amount] and any non-recurring expenses documented by Seller. Final purchase price shall be subject to adjustment based on due diligence findings related to enrollment data, facility lease terms, and financial statement verification.
💡 Sellers often calculate SDE using an optimistic add-back of their own labor without accounting for replacement cost of a full-time director or lead instructor. Buyers should model in a market-rate manager salary ($55,000–$80,000 annually depending on market) when normalizing SDE. If the seller is the head instructor, add back their teaching hours at a market instructor rate too. Also negotiate a price adjustment mechanism tied to verified enrollment count at close versus the enrollment count represented during LOI negotiation.
Deal Structure and Financing
Outlines how the acquisition will be financed, including any SBA loan, seller carry, equity contribution, or earnout component. Swim schools are SBA 7(a) eligible and frequently financed with 80–90% SBA debt, a 5–10% seller note, and 10–15% buyer equity. Seller carryback tied to enrollment retention milestones is a powerful risk-mitigation tool for buyers in this industry.
Example Language
Buyer intends to finance the acquisition as follows: approximately [80–90]% through an SBA 7(a) loan from [Lender Name or 'a qualified SBA lender'], with the remainder funded through a combination of Buyer equity of approximately [10]% and a Seller Note of approximately [5–10]% of the purchase price. The Seller Note shall be subordinated to the SBA loan, carry an interest rate of [6–7]%, and be repayable over [24–36] months. As a condition of SBA financing, Seller agrees to remain available for a transition period of not less than [90] days post-close and to execute a non-compete agreement covering aquatic instruction services within a [15]-mile radius for a period of [3] years. Buyer reserves the right to include an earnout of up to $[amount] tied to student retention rates of [80]% or greater measured at [6] and [12] months post-close.
💡 SBA lenders will require the seller to sign a non-compete as a condition of the loan guarantee — this is non-negotiable, so prepare the seller early. Earnouts tied to enrollment retention are highly recommended for swim school deals where the seller is a known community figure or has deep personal relationships with families. Structure the earnout measurement around active paying enrollment rather than gross revenue to prevent manipulation through discounting or promotional pricing. Seller notes are typically on standby for 24 months under SBA rules, so negotiate the note term accordingly.
Due Diligence Period and Access
Defines the length of the due diligence period and the scope of access the buyer will have to business records, facilities, staff, and systems. Swim school due diligence is operationally intensive and should cover enrollment data, instructor records, pool maintenance history, insurance, safety compliance, and billing software — plan for 45–60 days minimum.
Example Language
Upon execution of this LOI and delivery of a good-faith deposit of $[amount] into escrow, Seller shall provide Buyer with full access to the following within [10] business days: (i) three years of profit and loss statements and federal tax returns, (ii) monthly enrollment reports including active student count, waitlist length, churn rates, and seasonal variation by program type, (iii) facility lease agreement and all amendments, (iv) pool maintenance logs, HVAC and water system service records, and capital expenditure history, (v) instructor employment agreements, certifications (WSI, CPR, lifeguarding), and payroll records, (vi) insurance policies and certificates, incident and claim history for the past five years, and state aquatic licensing documentation, and (vii) billing software reports demonstrating auto-pay enrollment rates and revenue by program. The due diligence period shall run for [45–60] days from the date of full document delivery ('Due Diligence Period'). Buyer may terminate this LOI without penalty at any time during the Due Diligence Period if findings are unsatisfactory.
💡 Request access to the billing and scheduling software directly — platforms like IClassPro, Jackrabbit, or Pike13 are common in swim schools and contain granular enrollment data that sellers may summarize or massage in spreadsheets. Verify auto-pay percentages independently. Insist on reviewing actual incident reports and insurance claims rather than just certificates of insurance. Pool infrastructure is a major capital risk — get an independent mechanical inspection of filtration, HVAC, and water systems, as deferred maintenance on these systems can cost $50,000–$200,000+.
Exclusivity and No-Shop Provision
Requires the seller to cease marketing the business and negotiating with other buyers during the due diligence period. This protects the buyer's investment of time, money, and legal resources during diligence.
Example Language
In consideration of Buyer's commitment to conduct due diligence and incur associated costs, Seller agrees that from the date of LOI execution through the end of the Due Diligence Period (or earlier termination), Seller shall not solicit, encourage, or enter into discussions with any other prospective buyer regarding the sale of the Business or its assets ('Exclusivity Period'). Seller shall promptly notify Buyer in writing if Seller receives any unsolicited offer or inquiry from a third party during the Exclusivity Period. The Exclusivity Period may be extended by mutual written agreement if the parties are making good-faith progress toward a definitive purchase agreement.
💡 Sellers represented by brokers may resist a long exclusivity window, particularly if the business has received multiple offers. Negotiate a 45–60 day exclusivity period tied directly to the due diligence timeline. If the seller asks for a shorter window, offer to accelerate your diligence checklist delivery in exchange. Make clear that any breach of exclusivity entitles the buyer to a return of the good-faith deposit plus documented out-of-pocket diligence costs.
Conditions to Closing
Lists the key conditions that must be satisfied before the transaction can close. For swim school acquisitions, conditions should explicitly address lease assignment approval, enrollment retention at close, instructor continuity, and regulatory licensing transfers.
Example Language
The closing of this transaction is conditioned upon satisfaction of the following, each of which must be met to Buyer's reasonable satisfaction: (i) Landlord consent to assignment of the facility lease to Buyer on terms acceptable to Buyer, including confirmation of remaining lease term of not less than [5] years or execution of a new lease with renewal options; (ii) Active enrollment at the time of closing of not less than [X]% of the enrollment count represented by Seller at LOI signing; (iii) Continued employment commitment from not fewer than [X] full-time or part-time certified instructors through the closing date; (iv) Transfer or reissuance in Buyer's name of all required state and local aquatic facility operating licenses, health department permits, and business licenses; (v) Receipt of SBA loan approval and commitment letter from Buyer's lender; (vi) Seller execution of a non-compete and non-solicitation agreement covering aquatic instruction within [15] miles for [3] years; and (vii) No material adverse change in enrollment, revenue, or the physical condition of the pool facility between LOI signing and closing.
💡 The facility lease assignment is often the single biggest deal-killer in swim school acquisitions — engage the landlord early, ideally before LOI execution if possible. Some landlords treat a business sale as a lease termination trigger. Negotiate for a direct lease with the buyer rather than an assignment if possible. The enrollment condition at close protects against sellers who slow-walk marketing or allow churn to accelerate after LOI signing. Define the enrollment count baseline clearly with a specific number, not a percentage range.
Transition and Training Period
Establishes the seller's obligations to support a smooth operational handoff following close, including training the buyer in scheduling, parent communications, instructor management, safety protocols, and curriculum delivery.
Example Language
Seller agrees to provide Buyer with a post-closing transition and training period of not less than [90] days, with active involvement of at least [20] hours per week during the first [30] days, declining to [10] hours per week for the remaining period. During the transition period, Seller shall: (i) introduce Buyer to enrolled families through written communication and in-person events acceptable to both parties, (ii) train Buyer on scheduling software, billing systems, and parent communication protocols, (iii) introduce Buyer to key instructor staff and facilitate employment discussions for continued engagement, (iv) walk Buyer through all safety protocols, emergency action plans, and regulatory compliance requirements, and (v) provide access to all supplier, vendor, and contractor relationships. Seller's transition support is included in the purchase price. Any extended consulting beyond the transition period shall be negotiated separately at a rate of $[X] per hour.
💡 For swim schools where the seller is the primary community face — attending swim meets, communicating with parents on a first-name basis, or teaching classes — the transition period is critical and often underestimated. Consider structuring the seller's earnout or holdback to be contingent on completing transition milestones rather than just enrollment metrics. Buyers should also negotiate rights to send transition communications to the parent database under the seller's name or signature to maintain continuity of trust.
Confidentiality and Non-Binding Nature
Confirms that the LOI is non-binding except for specific provisions (exclusivity, confidentiality, deposit handling) and that both parties agree to keep deal terms and business information confidential during and after negotiations.
Example Language
Except for the provisions relating to exclusivity (Section [X]), confidentiality (this Section), and good-faith deposit handling, this Letter of Intent is non-binding on both parties and does not constitute a legally enforceable obligation to consummate the proposed transaction. Both parties agree to keep the terms of this LOI and all information exchanged during due diligence strictly confidential and shall not disclose such information to any third party other than legal counsel, accountants, and lenders directly involved in the transaction, without the prior written consent of the other party. Confidentiality obligations shall survive termination of this LOI for a period of [24] months. Seller specifically agrees not to disclose the existence of this transaction to instructors, parents, or staff without Buyer's prior written consent, except as required by law.
💡 Staff and parent confidentiality is particularly sensitive in swim schools. Word of a potential ownership change spreads quickly in tight-knit community environments and can trigger instructor departures and family withdrawals before due diligence is complete. Sellers who are eager to tell their community they are selling create real deal risk. Make the confidentiality provision enforceable with a liquidated damages clause tied to documented enrollment losses caused by premature disclosure.
Enrollment Count Verification and Price Adjustment
Insist on a specific, auditable definition of 'active enrollment' — students with at least one scheduled lesson in the prior 30 days and a valid auto-pay billing agreement on file. Tie the final purchase price to verified enrollment at close, with a dollar-per-student adjustment mechanism if enrollment falls below the baseline represented at LOI signing. A drop of 10–15% in enrollment between LOI and close can meaningfully impact SDE and business value.
Facility Lease Assignment Terms
Confirm that the landlord will consent to lease assignment or execute a new direct lease with the buyer before committing to the deal. Negotiate for a minimum remaining lease term of five years with at least one renewal option. If the pool is shared with a gym, YMCA, or school district, understand the sub-lease structure and whether the landlord has the right to terminate on short notice. Lease risk is existential for swim schools — the business cannot operate without the pool.
Seller Non-Compete and Non-Solicitation Scope
Negotiate a non-compete covering aquatic instruction services — including independent lessons, coaching, and any new swim school operation — within a clearly defined geographic radius (typically 10–20 miles depending on market density) for a minimum of three years. Separately negotiate a non-solicitation clause preventing the seller from recruiting instructors or contacting enrolled families for competing purposes. SBA lenders will require this as a loan condition regardless.
Instructor Retention and Employment Continuity
Identify the two to four instructors most critical to enrollment retention and negotiate representations that they will remain employed through close and will receive the same compensation terms under new ownership. Consider a key instructor retention bonus funded at close — typically $2,000–$5,000 per instructor — conditioned on continued employment for six months post-close. This cost is small relative to the risk of losing experienced, certified instructors who have built trust with enrolled families.
Earnout Structure Tied to Student Retention
If paying toward the high end of the valuation range (4.5x–5.5x SDE), structure 10–15% of the purchase price as an earnout tied to enrollment retention at 6 and 12 months post-close. Use active paying enrollment as the metric, not gross revenue. Set the retention threshold at 80% of the closing-day enrollment count. This protects against sellers who have strong enrollment at the moment of sale but whose personal relationships were the primary driver of that enrollment rather than systemic business quality.
Find Swim School Businesses to Acquire
Enough information to write a strong LOI on day one — free to join.
Most swim school acquisitions in the lower middle market trade at 3x to 5.5x SDE, with the multiple driven primarily by enrollment stability, waitlist length, lease quality, and the degree to which the business operates independently of the owner. A school with 500 active students, an 80-student waitlist, a 7-year lease with renewal options, and a manager in place will command 4.5x–5.5x SDE. A school where the owner teaches 30 hours per week and has a month-to-month lease will trade closer to 3x–3.5x, if it trades at all. SDE for quality swim schools in the $1M–$3M revenue range typically falls between $200K and $700K.
Most sections of an LOI are intentionally non-binding — they represent the agreed framework for negotiation, not a final enforceable contract. However, specific provisions are typically binding: the exclusivity or no-shop clause, the confidentiality agreement, and the terms governing the good-faith deposit. Buyers and sellers should have separate legal counsel review the LOI before signing, particularly given the industry-specific risks around lease assignment and safety compliance that can affect whether the deal ultimately closes.
Request direct read-only access to the school's scheduling and billing software — IClassPro, Jackrabbit, and Pike13 are common platforms. Pull reports showing active students with a lesson scheduled in the last 30 days, auto-pay enrollment rates, and monthly revenue by program type for the trailing 24–36 months. Cross-reference with bank statements to confirm revenue recognition. Do not rely solely on seller-prepared spreadsheets. Also request the waitlist data directly from the software rather than from a seller summary — waitlist length is a key value driver and should be independently verifiable.
A minimum of 90 days is standard, with at least 20 hours per week of active seller involvement in the first 30 days. If the seller is the community face of the school — known personally by most enrolled families — consider negotiating 6 months of part-time availability and a structured parent introduction campaign. The seller should send a personal communication to all enrolled families introducing the new owner, ideally co-signed or endorsed. Some buyers also negotiate a seller 'ambassador' role for the first season, where the seller attends events or open houses under new ownership to reinforce continuity.
Yes, swim schools are SBA 7(a) eligible businesses and are commonly financed with SBA debt. Most lenders will finance 80–90% of the purchase price for a qualified swim school with stable enrollment, clean financials, and a strong lease. The SBA will require the seller to sign a non-compete, the buyer to contribute 10–15% equity, and the seller note (if any) to be on standby subordination for a defined period. Expect the SBA loan process to take 60–90 days from application to funding, which should be factored into your LOI timeline and closing conditions.
This is one of the most underappreciated risks in swim school acquisitions. If a lead instructor departs after LOI signing and before close, it can reduce active enrollment, affect parent confidence, and materially change the SDE the buyer is paying for. Your LOI should include a material adverse change clause that covers significant instructor departures, and your closing conditions should confirm that a defined number of key certified instructors remain employed. Consider negotiating that the seller fund retention bonuses for key instructors from the purchase proceeds, paid at close and vesting at 6 months, to align the seller's financial interest with instructor continuity through the transition.
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