Eric King

The Letter of Intent – A Primer for Business Owners

At this stage you have likely held anywhere from one to three (or more) meetings with a prospective buyer. If you are running a structured sale process soliciting multiple buyers, then you have spoken with several suitors and narrowed the prospects to 1-4 prospective buyers for these more in-depth discussions. Ideally the prospective buyer(s) and you should both be at a go/no-go decision point on continuing the discussion. If the buyer elects to continue, then expect to receive a Letter of Intent (LOI) outlining the buyer’s proposed deal structure and terms. Receipt of an LOI from a potential buyer is a clear signal that they are serious in their intentions; however it is not a “given” that they are fully committed yet. In fact, some buyers are known for not closing a high percentage of issued LOIs since their strategy is to lock-up as many potential deals as possible and close only the top 3-4 of the lot. Continue reading

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