To put it simply, a Letter Of Intent (LOI) is a letter that a buyer sends to a seller to let the seller know that they are a serious buyer who is looking to make a serious offer on the business.

LOI’s are typically used for larger business transactions, though that is not always the case.  Consult with your business broker to determine if the LOI is the right way for you to proceed in a potential business deal.

In the LOI will be an initial summary of the terms; like timing of the steps taken in the future, price and other terms. This document is non-binding, but is considered a serious commitment by you to the business transaction, and lets a seller know that you have the initiative to see the deal go through.

This will allow you to get into the due diligence phase, where you will have access to the financials and other records of the business.  After this phase you will be permitted to either back out of the deal or make an offer to purchase, depending on what you find out during due diligence.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com