The Letter of Intent (LOI) is the first step toward formalizing the deal to buy (or sell) a business.
An LOI can be binding, non-binding, or a hybrid with both binding and non-binding provisions. It should cover the points that the buyer and seller have already discussed and agreed upon, and open the door for negotiations on points not yet discussed or settled.
Why is this important?
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It shows the parties are serious – we aren’t dealing with “tire-kickers.”
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It helps focus the negotiations on the bigger, stickier issues – getting the smaller issues addressed up front and out of the way.
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It can be a useful tool as an early indicator that the deal might now work – if there’s nothing the parties can agree, or if it shows that the parties are on very different pages regarding the sale.
What might the LOI address?
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That the seller will stop soliciting and taking offers for a set time (while the buyer performs her due diligence).
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The initial price – which would remain open to negotiation upon the findings of the due diligence.
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Listing additional documents that the parties expect to sign as part of the sale.
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How long will the buyer have to conduct due diligence?
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Will the Parties require each other to sign nondisclosure agreements prior to the due diligence? Can they even talk publicly about the potential deal?
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Who will bear the legal costs? One party or the other, or will they bear their own costs?
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Are there going to be any conditions to closing, such as favorable financing, or the location of appropriate retail space?
Are you Buying or Selling a business? I can help with the LOI and all of the proper documentation. Let’s chat and get the ball rolling in the right direction!
Book your no-obligation consult now: https://calendly.com/lisasigmanlaw/consult