SEVEN STAGES
Go to Is it actually time to sell?
1
Deciding
Is it actually time to sell?
Go to The year before you go to market
2
Getting Ready
The year before you go to market
Go to How buyers really get found
3
Going to Market
How buyers really get found
Go to You've been handed an LOI
4
The LOI
You've been handed an LOI
Go to Where deals get re-traded
5
Diligence
Where deals get re-traded
Go to The paperwork that decides what you keep
6
Closing
The paperwork that decides what you keep
Go to Nobody prepares you for the year after
7
After
Nobody prepares you for the year after

Selling a Business — Stage 4: The LOI

You've been handed an LOI

What's actually happening

You have a formal offer. It outlines the purchase price, the working capital target, the exclusivity period, and the broad strokes of the definitive agreements. It feels like a victory, but it is actually the beginning of the most dangerous period of the transaction.

Where your broker is right now

They are telling you to sign it so the deal doesn't lose momentum. They are minimizing the exclusivity period and telling you that the legal terms can be worked out later during diligence. They want the clock to start.

What this costs you if it goes wrong

Signing an LOI with bad terms destroys your leverage. If you don't lock down the working capital peg methodology, the exclusivity triggers, and the structure of the earnout now, you will pay for it heavily in diligence.

What I'd be doing here

I review the LOI line by line before you sign it. We identify the traps, rewrite the exclusivity conditions to protect you, and ensure the working capital language matches how your business actually operates.

Are you in this stage right now?

If you are navigating the loi and need a second set of eyes on the details, let's talk.

Start a conversation