What is a Letter of Intent?
Letter of Intent...AKA an LOI
This is the initial offer a buyer submits to a seller. It lays out:
- general terms of the purchase,
- business value/purchase price,
- real estate plan (if selling RE) purchase/value, structure,
- source and use of funds,
- working capital PEG,
- seller considerations,
- transition timing,
- employment agreement,
- indemnity cap and basket and
- due diligence expectations.
These are initial offers to buy your business. Once you sign an LOI you exclusively work with this buyer towards closing the deal.
Why it matters to you?
Each interested buyer submits an LOI. You compare these letters directly to evaluate their offers. It allows you to prioritize what is most important to you and find a buyer that matches your needs.