If you're trying to buy your first business, going from meeting a potential seller to a signed letter of intent (LOI) can seem daunting.

In the past two years, I've purchased two dog kennels and evaluated countless others. Here are a few simple steps to get you from "hello" to a signed LOI. This is the hardest part of the acquisition process, it's like dating and the LOI is the engagement. If you do this right, you'll have a high probability of closing and buying your first company.

Meet for Coffee

It's best to start simple. Make sure your values align with a few informal chats - compare notes on how you both do business. Understand why they're selling. Try to be helpful. Most sellers want to ensure their legacy stays intact, and that their employees will be taken care of. By being human, you'll make them a lot more excited about the deal.

Ask for what you need to say "NO"

An acquisition process can be a huge time suck for both you and the seller. Once you're both comfortable that there's a real opportunity here, ask for whatever you need to see that would kill the deal. Look at their financials in detail. Understand what all you'll be buying and if it meets your criteria. Get a schedule of add-backs and owner comp and work out your internal valuation range.

Tee up a valuation

I've verbally negotiated some deals pre LOI whereas others were hashed out on paper with an LOI. Regardless of your approach, it's best to float a valuation range early.

"We pay 2-4x seller discretionary earnings/EBITDA."

"I want 10x..."

"Thanks for the coffee," is a way easier conversation to have and leaves less of a bad taste than spending weeks getting to know each other only to break up.

Avoid the Sunk Cost Fallacy

Just because you've put time and energy into a deal doesn't mean it's the right deal. There are always other deals, so if you see a maybe, dive in and turn it into a hell yes or a hell no.