{"id":4579,"date":"2026-06-22T13:43:20","date_gmt":"2026-06-22T13:43:20","guid":{"rendered":"https:\/\/amerivestgroup.com\/?p=4579"},"modified":"2026-07-20T19:04:51","modified_gmt":"2026-07-20T19:04:51","slug":"letter-of-intent-loi-business-sale","status":"publish","type":"post","link":"https:\/\/amerivestgroup.com\/en\/letter-of-intent-loi-business-sale\/","title":{"rendered":"What Is a Letter of Intent (LOI) and What Should Sellers Watch Out For?"},"content":{"rendered":"\t\t
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SELLER EDUCATION<\/p>\t\t\t\t<\/div>\n\t\t\t\t

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What Is a Letter of Intent (LOI)?<\/h1>\t\t\t\t<\/div>\n\t\t\t\t
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Key sections to review, what's binding vs. non-binding, and the red flags every seller should watch for before signing.<\/p>\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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You’ve spent months marketing your business, fielding buyer calls, reviewing financials with strangers, and finally \u2014 a qualified buyer says they want to move forward. They submit a Letter of Intent.<\/p>

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For many sellers, this feels like the finish line. It’s not. It’s the starting line.<\/p>

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The Letter of Intent (LOI) \u2014 sometimes called a term sheet or offer letter \u2014 is a critical document in the business sale process. It sets the framework for the deal before either party spends significant time or money on due diligence, legal fees, or formal purchase agreements. Understanding what’s in an LOI, what’s negotiable, and what red flags to watch for can mean the difference between a successful closing and a deal that falls apart under pressure.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t

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What Is a Letter of Intent?<\/h2>\t\t\t\t<\/div>\n\t\t\t\t
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A Letter of Intent is a formal document submitted by a prospective buyer that outlines the basic terms under which they are proposing to purchase your business. Think of it as a blueprint for the deal \u2014 a roadmap that both parties agree to follow as they move into the more detailed stages of due diligence and legal documentation.<\/p>

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The LOI is generally non-binding, meaning neither party is legally obligated to complete the transaction based solely on the LOI. However, certain provisions \u2014 most notably the exclusivity clause and confidentiality obligations \u2014 are typically binding once signed.<\/p>

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Most LOIs are 3 to 10 pages long and are submitted after a buyer has reviewed your Confidential Information Memorandum (CIM), held preliminary discussions with you or your broker, and completed initial financial analysis.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t

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Key Sections of an LOI Every Seller Should Understand<\/h2>\t\t\t\t<\/div>\n\t\t\t\t
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1. Purchase Price and Structure<\/h3>

This is the section most sellers focus on \u2014 and rightfully so. The LOI will state the proposed purchase price and, critically, how it will be paid. Not all purchase prices are created equal:<\/p>