Service-based businesses come with their own set of challenges and rewards. Last time, Laura talked about buying asset-heavy businesses. In this episode, Laura DiFrancesco explains what makes buying a service-based business different. She covers how things like recurring revenue, contract structure, customer retention, and employee talent affect deal terms and valuation. Laura also explains the risks, like financial fluctuations and scaling limitations, and shares how to approach due diligence when client experience is hard to measure. It’s a clear look at what buyers need to understand before making a deal.

What You’ll Learn

Evaluating Service-Based Business Models

// Understand how the business model, customer base, and revenue structure impact deal terms and valuation.

Conducting Due Diligence Without Customer Access

// Learn how to assess customer experience, retention, and satisfaction using public tools when direct communication isn’t possible.

Managing Working Capital and Cash Flow

// See how different billing practices and seasonal trends affect working capital needs and cash flow risks.

Handling Work-in-Progress and Project Profitability

// Explore how to assess in-progress work and align profit allocation fairly based on project stages at closing.

The Role of Key Employment Agreements

// Discover why retaining talent matters most in service-based businesses and how to structure agreements for post-sale continuity.

Episode Highlights:

[00:00 ] Introduction to Dealmaking with Laura DiFrancesco

[01:27 ] Book preview

[03:00 ] Defining service-based businesses

[08:09 ] Deal Street Law ad

[09:07 ] How to diligence customer experience

[11:15 ] Working capital vs. work-in-progress explained

[15:20 ] Key employment agreements and post-sale continuity

[17:19 ] Outro

Resources Mentioned

• Entrepreneurship Through Acquisition waitlist  // https://lauradifrancesco.co/eta-landing-page

• Ep 23 Negotiating the Purchase Price and Seller Notes // https://open.spotify.com/episode/5qktKA5RsiZiKcqd1v4gpa?si=H46hklPmQ16ef48knWPURQ

• For free legal guides and resources click HERE.

• Unlock your legal roadmap to success with Acquisitions Insights 

• Schedule your complimentary consultation with Dean Street Law today!

Connect with Us

• Follow on Twitter: @LMDiFrancesco

• Follow on Instagram: @lauramdifrancesco and @deanstreetlaw

• Connect on LinkedIn: linkedin.com/in/lauradifrancesco

Our Sister Brands

• Follow Flourish Coworking Space on Instagram: @flourishwestchester 

• Follow Ethereal Farms on Instagram: @etherealfarms

• Check out my other podcast We Grow Together on Spotify and Apple Music 

Don't miss an episode of "Dealmaking with Laura DiFrancesco." Follow me on your favorite podcast platform and visit deanstreelaw.com to schedule a consultation today. Whether you're a seasoned entrepreneur or stepping into the world of mergers and acquisitions for the first time, let us guide you to success. 

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Credits

Host // Laura DiFrancesco

Executive Producer // Teagan Rowland 

Editor // Jules Bernardo

Associate Producer // Jules Bernardo

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