When selling a business, one of the first formal steps in the negotiation process is the Letter of Intent (LOI). This document sets the stage for a potential deal, helping both the seller and buyer move forward with clarity and confidence.
What Is a Letter of Intent?
A Letter of Intent is a non-binding agreement that outlines the initial terms of a potential business sale. While it is not the final contract, it helps both parties align on the key points before diving into more detailed negotiations.
Key Elements Typically Included in an LOI:
Proposed purchase price
Timeline for due diligence
Confidentiality agreements
Clarification that the LOI is non-binding
Basic financing terms (down payment, loans, or seller financing)
Why the LOI Matters
Think of the LOI as a written handshake. While it doesn’t legally bind either party to a sale, it:
Shows serious intent from the buyer
Gives the seller confidence to share sensitive information
Creates a shared understanding before drafting the final purchase agreement
An LOI also helps avoid misunderstandings, keeps negotiations on track, and can speed up the closing process.
What the LOI Is Not
It is not a final contract.
It does not guarantee the sale.
It does not include every detail of the transaction.
Instead, the LOI serves as a starting point—an outline that both sides agree to explore further. Either party can walk away without legal consequences.
If you’re preparing to sell your business, having a solid LOI template can make all the difference. At BizBroker+, we provide tools and guidance to help sellers navigate this step confidently.
Learn more about selling your business: Sell Your Business
Explore serious buyers ready to purchase: Businesses for Sale
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