Understand the business. Before you make the offer.
Get to no faster. Examine seller materials and test acquisition assumptions before committing more time and money to a deal.
BEFORE THE LETTER OF INTENT
Find reasons to pass. Before the costs add up.
A letter of intent (LOI) is a step toward an acquisition, not a completed deal. Use early analysis to surface poor fits before you commit to the expense of deeper diligence.
PASS
The deal misses your criteria.
Record why the opportunity does not fit your goals or why the acquisition assumptions do not work. Keep that reasoning with the company.
INVESTIGATE
An answer could change your view.
Separate missing evidence from a reason to walk away. Turn gaps in the seller materials into specific questions for the next conversation.
CONTINUE
You know what to check next.
Carry the open questions into offer preparation and diligence. Early screening helps you focus the work; it does not replace accounting, legal, or confirmatory diligence.
SELLER MATERIALS · QUESTIONS · ASSUMPTIONS
Start with the evidence. Keep track of the gaps.
Bring a seller’s business overview—often called a CIM—or financial statements into the company file. Keep your conclusions connected to the material behind them.
INPUT
Collect the seller’s story.
Keep the business overview, financial periods, and conversation notes with the company. Check permission before sharing confidential materials with an AI provider.
Use cash flow scenarios to explore debt payments and the cash the business needs. Revisit the assumptions as stronger evidence arrives.
NORTHSTAR · ANNUAL CASH FLOW SCENARIOFICTIONAL EXAMPLE
Illustrative acquisition assumptions
Assumed operating cash flow$480,000
Annual debt payments−$210,000
Cash retained for the business−$90,000
Remaining before buyer taxes$180,000
QUESTION TO INVESTIGATE
How reliable is the revenue?
Request revenue by customer and supporting contract information before treating recurring sales as secure.
What changes if debt payments are higher?
In this fictional scenario, increasing annual debt payments by $30,000 reduces remaining cash from $180,000 to $150,000, assuming everything else stays the same. A full acquisition model must examine its own assumptions and evidence.
Illustrative arithmetic, not a financing quote or cash flow guarantee.
THE SKILL SUPPLIES A METHOD
Give your agent a defined analytical task.
Prepared financial methods specify the inputs and output. Your supported agent runs them when the integration is available; you review the result.
Income statement analysis
Examine financial health using seller-provided periods, including revenue. Use the findings to identify what needs further investigation.
Leave with the evidence you reviewed, the assumptions behind your scenario, and the unresolved questions that determine your next step.
Does a promising model mean I should make an offer?
A model is one input to your judgment. Verify important assumptions and work through the risks with appropriate advisors. You may need more evidence, decide to pass, or begin preparing offer terms.