The HVAC PE Deal Timeline: What Happens Between LOI and Close (And How Long It Really Takes)

Most HVAC owners who sign an LOI think they're almost done. They're not. The handshake is done. The work — and the risk — is just beginning. Between the LOI and the closing wire, PE buyers will scrutinize every number you've ever reported, review every contract you've ever signed, and give their lawyers 60 days to find a reason to reduce the price. The exclusivity window locks you in. The clock runs. And most sellers are completely unprepared for what the next 90–150 days look like.

Here's the full timeline, stage by stage — with estimated durations, what's happening on the buyer's side, and where deals blow up.

The 7 Stages: LOI to Close

The letter of intent is non-binding on price — but the no-shop clause is very binding on you. The moment you sign, the exclusivity window opens. You typically have 60–90 days during which you cannot solicit or entertain offers from other buyers. The buyer has all the leverage. You have none.

The key risk here is signing too quickly before negotiating LOI terms carefully. Earn-out structure, working capital peg methodology, representations and warranties scope — these are far easier to negotiate before you're locked into exclusivity than after.

What to do on Day 0: hire an M&A attorney if you haven't already. Before Day 1, make sure you understand every binding term in the LOI.

Within days of signing, the buyer hires a third-party accounting firm to conduct a quality of earnings (QoE) audit. This is the most dangerous stage for sellers. QoE accountants are not auditing your books to confirm them — they're auditing to find reasons to reduce the purchase price.

They will request 3–5 years of financial statements, tax returns, payroll records, customer revenue by account, and documentation for every add-back you've claimed. Every personal expense run through the business, every one-time item treated as normalized EBITDA, every related-party transaction will be scrutinized. Most deals slow down or re-price during QoE.

The best preparation: clean books, documented add-backs, and no surprises. If there are skeletons, disclose them early — the QoE team will find them.

Running parallel to the QoE audit, the buyer's operations team reviews the business from the ground up. This is where they dig into the things that don't show up cleanly on the P&L: customer concentration (what percentage of revenue comes from your top 3 accounts?), key-man risk (what happens if you leave?), HR and employment practices, tech stack and software systems, licensing and bonding compliance, and the depth of your management team.

You should expect site visits, management interviews, and requests to see contracts, customer lists, and employee org charts. The PE diligence questions come fast and they come from multiple directions simultaneously.

The buyer's lawyers run this in parallel with operational diligence. They review every material contract (customer, vendor, subcontractor), all property leases, any litigation history or pending claims, employment agreements (especially non-competes and non-solicits for key staff), and intellectual property or trade name ownership.

Legal diligence rarely kills deals outright — but it frequently creates conditions, price adjustments, or indemnification demands. Undisclosed lawsuits, personal guarantees on equipment leases, or employees without signed offer letters are the most common issues that surface here.

This is where deals re-trade. The definitive purchase agreement (DPA) is a 60–150 page document that codifies every deal term. The major battlegrounds:

• Working capital peg. A target level of working capital at close; if you deliver less, the price drops dollar-for-dollar. The negotiation over what counts as working capital and what the target should be is frequently contentious.

• Indemnification caps and baskets. How much can the buyer come back to you for post-close if a representation turns out to be inaccurate? How long do they have to make that claim?

• Representations and warranties. Dozens of statements you're making about the business. Each one is a potential indemnification claim if it's wrong.

• Earn-out structure. If the deal includes deferred consideration, the earn-out structure gets finalized here: metrics, measurement period, calculation methodology, and payment triggers.

While the purchase agreement is being negotiated, the buyer is simultaneously securing financing. PE buyers use a combination of equity (their fund capital) and debt (senior secured loans from lenders). The lenders have their own due diligence process. The buyer's internal deal committee must also sign off on final terms.

If SBA 7(a) financing is involved — common in smaller HVAC deals where the buyer is an individual or search fund — add 30+ days to this stage. SBA approval is slow and unpredictable. Institutional PE rarely uses SBA; independent buyers or first-time acquirers often do. Know your buyer's financing structure before you sign the LOI.

The wire hits. You sign a stack of closing documents. You are no longer the owner. What happens next depends on what you negotiated: a 30–90 day transition period is standard, during which you help the buyer's team take over operations, introduce them to key customers and staff, and hand off operational knowledge.

If you have an earn-out, the post-close period is when that clock starts. This is also when the working capital true-up occurs — typically 60–90 days after close, when the buyer calculates actual working capital at close and adjusts the purchase price accordingly.

Where Deals Die

Between LOI and close, deals can and do fall apart. Here are the five most common reasons HVAC PE acquisitions fail to close after the LOI is signed.

What You Can Control

You can't control how long a buyer's lender takes or whether their deal committee has concerns. But you can control your own readiness — and the sellers who close on time, at the stated price, do these four things.

• Clean books before the LOI.

  Get 3 years of financials normalized, documented, and reconciled before any buyer runs a QoE. Surprises during diligence reprice deals. No surprises means no leverage for the buyer to come back with a lower number.

• Employment agreements for key staff.

  Your top technicians, service managers, and dispatch leads should have signed offer letters, compensation agreements, and ideally non-solicitation agreements before the deal starts. A buyer who sees undocumented key employees will demand protection — or discount the price.

• No customer concentration above 15%.

  PE buyers get uncomfortable above 15% concentration in a single customer. Above 20%, expect a significant discount or deal conditions. Start diversifying your customer base 12–18 months before you plan to sell.

• Hire your own M&A attorney before signing.

  The buyer's lawyers wrote every document in the process. You need your own counsel reviewing the LOI, the reps and warranties, the working capital methodology, and the earn-out terms before you sign anything. Attorneys who specialize in M&A (not general business counsel) know the standard terms and can tell you when something is unusual.

Frequently Asked Questions

OffRamp is a free valuation tool for HVAC business owners. We don't sell your information, represent buyers, or work on commission. The calculator and reports are educational tools — always consult a licensed M&A advisor before entering a sale process.