Letter of intent
Also called LOI
A non-binding term sheet setting out price, structure, and key terms, which typically grants exclusivity.
In a sale
What it changes in a sale
The letter of intent is where price, structure, and the key terms are first written down, and it usually grants the buyer exclusivity. Although it is non-binding, a term it leaves out is hard to win back once exclusivity begins. Comparing letters of intent on take-home and certainty, not on the headline, is how founders choose among them.
Where it comes up
Read it in context
In the articles
- Same business, two outcomesTwo identical businesses, one prepared and one not, sell for very different prices.
- An add-back is an argumentAdjusted EBITDA is built, not declared, and the buyer's accountants will rebuild it.
- What an LOI is really sayingThe headline is one term of nine. Here are the other eight.
- When a buyer calls firstAn inbound offer is information, not a decision.
- Diligence yourself firstEvery business has issues. The question is who finds them.
- Strategic, platform, add-on, sponsor: who buys whatDifferent buyers pay for different things. The process should include several.
- Structure is priceTwo offers with the same headline can differ by millions in what you keep.
In The FNDRS Playbook
See the terms with your own numbers
The Go-To-Market Analysis (GTMA) builds the file a buyer would build on your business, before a buyer does.