How We Evaluate a Business Letter of Intent

When you get a letter of intent (LOI), you know things are getting serious. Think of it as the formal handshake that kicks off the deal-making process for selling your business. It's not the final contract, but it's the document that lays out the major terms of the proposed sale, showing a buyer is ready to move beyond just talking.

An LOI is a mostly non-binding agreement that outlines the key points of the deal, aligning both you and the buyer before either side spends a fortune on lawyers and accountants.

How We Review a Business Letter of Intent

Before we call an LOI strong or weak, we review it the way a seller should: by asking what happens to leverage, timeline, and deal certainty the moment it is signed. In our review process, we look first at whether the draft actually matches the transaction being proposed—asset sale, equity sale, or a hybrid with assumed liabilities and third-party approvals. Then we test whether the economics are specific enough to survive diligence without a predictable price retrade.

We also separate the clauses that are merely business terms from the clauses that create immediate obligations. If exclusivity starts on signature, we want to know how long it lasts, what progress the buyer must show, and whether the seller has any practical protection if the process stalls. If confidentiality, expense allocation, or access rights are binding, they need to be labeled and drafted that way.

A draft is disqualified, in our view, when it leaves core terms vague, gives the buyer open-ended diligence, or creates binding restrictions without clear deadlines. Sellers often focus on the headline price first. We see more deals go sideways because of sloppy process terms than because of the initial number.

How We Evaluate a Business Letter of Intent

A strong LOI is not the one with the highest headline number. It is the one that makes the economics clear, limits avoidable ambiguity, and creates a realistic path from interest to closing. In our review of LOIs, five criteria matter most.

First, the economics have to be plain on the page: purchase price, cash at closing, seller financing, earn-outs, holdbacks, and any working-capital assumptions. Second, the document should cleanly separate non-binding business terms from the clauses that are meant to bind right away, usually confidentiality, exclusivity, and sometimes expense allocation. Third, the diligence section should define scope and timing tightly enough that the buyer can investigate the business without turning the process into open-ended deal drift.

Fourth, the timeline has to create pressure on both sides. A good LOI has milestone discipline, not vague promises to work toward closing. Fifth, evaluate industry-specific conditions that can stop a deal. In a FedEx ISP transaction, that means transfer approval is not a footnote, it is a gating issue that belongs in the closing conditions.

We also judge every LOI by a practical question sellers often miss: if this exact draft were signed today, would the balance of power shift too far to the buyer once exclusivity begins? That lens matters because the LOI is not just a summary. It is the negotiation framework for the purchase agreement that comes next.

The Letter of Intent: Your First Big Win in a FedEx ISP Sale

When people say the “intent of biz” in a sale context, they usually mean the purpose of a business LOI: a short written document that captures the proposed deal before the purchase agreement is drafted. It is not the full sale contract. It is the step where buyer and seller confirm the core terms are close enough to justify diligence, legal drafting, lender review, and management time. That is why a letter of intent for business matters long before closing day.

The line sellers need to understand is this: an LOI shows commitment to a process, not always commitment to close. Most business terms inside it—price, structure, assets included, timeline targets, and diligence assumptions—are commonly stated as non-binding proposals. But some clauses are often intended to bind immediately, especially confidentiality, exclusivity, and sometimes expense allocation or governing law. The distinction is widely recognized in legal practice; the American Bar Association notes that whether an LOI is binding in whole or part depends on the wording and context, not just the title, and the same point is explained in this overview from Kons Law and the ABA Business Law guidance.

Sellers use an LOI before the purchase agreement because it narrows the field fast. Without one, a buyer can stay vague about price, financing, diligence scope, and timing while still absorbing your attention. With one, the buyer has to put a structure on paper. In our review of LOIs, that moment is where leverage becomes real: you can compare cash at closing to contingent payments, push back on a long no-shop period, and force clarity on closing conditions before the legal bill climbs. For owners thinking about an eventual exit, that discipline matters because transition intent is widespread but preparation is not; Project Equity's owner-transition statistics summarize how many privately held businesses expect ownership changes within the next decade.

A simple example shows the practical effect. Suppose a buyer says they want to buy your FedEx ISP operation for $2.8 million. That sounds promising, but it tells you very little. An LOI might reveal that only $2.1 million is paid at closing, $300,000 is subject to a 90-day holdback, $200,000 depends on transfer approval timing, and $200,000 is an earn-out tied to post-close performance. It might also require 75 days of exclusivity and a broad diligence right. The LOI has not closed the deal, but it has changed the process completely: now you can negotiate the actual economics and the buyer's timetable before moving into the purchase agreement.

Setting the Ground Rules for the Deal

An LOI is about much more than just the price. It's a blueprint that sets the rules for the entire sale, and a good one will tackle the big-ticket items right away to prevent headaches down the road. In the broader U.S. business tradition, early written deal frameworks grew out of the need to define ownership, obligations, and transfer terms clearly as incorporated enterprises scaled, a theme reflected in the Bush Center's discussion of the bedrock of America's business model. If you are still shaping the sale process itself, the SBA's plan your business resources are also a useful reminder that planning discipline matters before negotiation pressure starts.

Here are the key elements you'll see hammered out in the LOI:

• Purchase Price and Structure: This defines the total offer and how the buyer plans to pay, whether it is all cash at closing, a deal with seller financing, or some other combination.
• Due Diligence Period: A specific window of time, usually 60 to 120 days, where the buyer gets to dive deep into your financials, contracts, and operations.
• Exclusivity Clause: This is a binding "no-shop" provision, meaning you agree not to entertain or negotiate offers from other buyers while the current deal is in progress.
• Conditions to Closing: These are the must-haves for the deal to go through. For a FedEx business, the most critical condition is always getting official approval from FedEx Ground for the new owner.

Getting these major points agreed upon upfront is vital. There’s nothing worse than wasting weeks on a deal only to find out you and the buyer were on completely different pages about something fundamental.

The best deals are built on clarity. A strong letter of intent ensures all parties understand the core objectives from day one, preventing the kind of "hairline fractures" in communication that can doom a transaction later.

Building Leverage and Momentum

Receiving an LOI is a significant milestone. It puts a concrete offer in your hands that you can evaluate and negotiate, and it officially shifts your focus from marketing your business to closing a deal. You should grasp this shift before you decide to put your company for sale.

This document locks in the core terms while you still have maximum negotiating power, that is, before the buyer sinks a lot of money into due diligence. Once you sign the LOI and the exclusivity period starts, your bargaining power naturally dips a bit. That is why it is so important to make sure the initial LOI has the best possible terms for you.

Ultimately, the letter of intent creates the momentum needed to get a complex transaction across the finish line. It builds a sense of shared purpose and sets a clear timeline, which keeps everyone focused. It may not be the final contract, but for selling a FedEx business, it is the essential first step toward a successful exit.

Deconstructing the Key Clauses in a FedEx Business LOI

A Letter of Intent isn't just a handshake over the price; it's the blueprint for your entire sale. While mostly non-binding, an LOI outlines the core terms that will shape the final, legally binding purchase agreement. For a FedEx ISP owner, getting these details right from the start is absolutely critical.

Think of it as the roadmap for the deal. Each clause has a job to do, and what you agree to here gives you, or the buyer, bargaining power down the road. An important question is not only what each clause says, but what problem it is trying to solve for both sides.

What the Main Clauses Are Actually Trying to Accomplish

The price clause is meant to anchor the economics before diligence starts. For the buyer, it sets the maximum expected deal value and often bakes in assumptions about debt, working capital, assets included, and future performance. For the seller, its real purpose is to force precision early enough to expose whether the buyer is offering cash certainty or a more conditional package disguised by a big headline number. Many sellers either preserve negotiating power or give it away.

The exclusivity clause exists to buy the buyer a protected window to spend money on diligence and drafting without being outbid. That benefit is legitimate, but the seller's tradeoff is steep: once exclusivity begins, the seller's bargaining position weakens because competing buyers are effectively sidelined. This is why many deal lawyers push for narrow exclusivity periods with extensions tied to concrete progress, an approach consistent with guidance in the Practical Law discussion of LOIs).

The diligence scope clause is supposed to make investigation possible without allowing endless fishing expeditions. Buyers want broad access because hidden problems destroy value. Sellers want boundaries because repeated requests, vague standards, and slow-moving reviews create openings for delay and price retrades. A disciplined LOI tells both sides what categories will be reviewed, what access is expected, and how long the buyer has to reach a yes-or-no decision.

The closing conditions clause is the bridge between intention and execution. Its purpose is to identify the external or factual events that have to happen before money changes hands: financing, third-party consents, no material adverse change, accuracy of representations at signing and closing, and in a FedEx deal, approval of the transfer. The more specific those conditions are, the less room either side has to invent new requirements late in the process.

Purchase Price and Payment Structure

Everyone’s eyes go straight to the price, but the total number is only half the picture. How you get paid is just as important. A buyer can structure their offer in a few different ways, and each one carries different implications for you.

• All-Cash Offer: Simple and clean. The buyer pays you the full purchase price at closing. You get your money immediately and walk away with zero future risk tied to the business's performance.
• Seller Financing: You agree to finance a portion of the sale price yourself. The buyer pays you back over time, with interest. You act as the bank for a piece of the deal, which can attract more buyers but also means you carry some risk until the loan is paid off.
• Earn-Out Provision: Part of the price is tied to the business hitting specific performance goals after you’ve sold it. For instance, you might get an extra payment if the business achieves a certain revenue target in the first year under new ownership.

An offer with a big earn-out is a world away from an all-cash deal, even if the total potential number looks higher. You have to weigh the certainty of cash in your pocket against the potential—and risk—of more complex structures.

The Exclusivity or No-Shop Clause

This is one of the few parts of an LOI that is almost always legally binding. Once you sign an LOI with an exclusivity clause, you cannot talk to, entertain, or negotiate with any other potential buyers during the specified period.

This “no-shop” period usually lasts between 60 and 120 days. It gives the buyer the confidence to spend serious time and money on due diligence without worrying you’ll take a better offer behind their back. Your goal as a seller is to keep this window as short as you can. A shorter period keeps the pressure on the buyer and lets you get back on the market faster if the deal doesn’t work out.

A well-negotiated LOI balances the buyer's need for security with the seller's need for momentum. The exclusivity clause is a perfect example—it should be long enough for serious diligence but short enough to prevent deal drag.

Due Diligence Scope and Timeline

The due diligence clause gives the buyer the green light to dig into your business’s financial, operational, and legal records. For a FedEx ISP, this process is exhaustive. They’ll want to see everything from P&L statements and tax returns to truck maintenance logs and payroll records.

The LOI needs to clearly define what the buyer can look at and set a firm timeline for them to do it. This stops the buyer from going on a never-ending “fishing expedition” for problems. A tight deadline forces them to be efficient and keeps the deal moving forward.

The transactional point here is broader than FedEx. In M&A practice, the LOI often serves as the first negotiated map of diligence priorities, process timing, and the expected form of the final acquisition agreement, as reflected in the International Association of Privacy Professionals overview of LOIs in M&A and the ABA's acquisition process guide. Before exclusivity begins, sellers still have competitive tension on their side; after signing, buyers gain practical advantage because they control the pace of diligence and can test assumptions with fewer competitive consequences.

Essential LOI Clauses and Their Purpose

To help you work through your LOI, here is the practical lens that matters most: what each clause protects, and where it can shift bargaining power.

ClauseWhat the clause is trying to accomplishSeller's best move

Purchase Price

Anchors the economics and signals whether the buyer is paying for current performance, future upside, or both.

Push for clarity on cash at closing, debt assumptions, and any contingent payments before exclusivity starts.

Good Faith Deposit

Shows seriousness and creates some cost if the buyer walks without cause.

Tie the deposit to specific milestones and make sure release terms are clear.

Exclusivity (No-Shop)

Gives the buyer a protected window to spend on diligence and drafting.

Keep it short, avoid automatic extensions, and require active progress for any extension.

Due Diligence

Defines how the buyer will verify the business and whether they can test every assumption behind the offer.

Limit scope to reasonable categories, set deadlines, and avoid vague rights to unlimited follow-up.

Conditions to Closing

Lists the events that must occur before either party is required to close.

Make conditions specific, objective, and tied to real transaction risk rather than open-ended discretion.

Representations & Warranties

Frames what facts the seller is standing behind in the final agreement.

Resist introducing broad representations by implication in the LOI stage.

Termination

Explains how the process ends if milestones fail or diligence uncovers a real problem.

Preserve a clean exit if the buyer misses deadlines or materially changes terms.

Confidentiality

Protects sensitive financial, employee, and operational information.

Make it binding, specific, and durable even if the deal dies.

Timeline

Creates process discipline and a target path to signing and closing.

Use dated milestones to prevent drift and expose buyers who are not moving decisively.

This table serves as a quick reference, but the drafting point is simple: a short LOI can still create major commercial consequences. I would never treat it as disposable paper just because most of it is labeled non-binding.

Conditions to Closing

This section is your "out" clause. It's a checklist of everything that must happen for the deal to close. If any of these conditions aren't met, either party can usually walk away without penalty.

For any FedEx business sale, you’ll see common conditions like:

• The buyer must secure their financing.
• There has been no major negative change to the business’s financial health.
• Everything you stated as fact (your "reps and warranties") is still true.
• The single most important condition: The buyer must get official approval from FedEx Ground to take over the contract.

That last point is the big one and is unique to our industry. Without FedEx’s blessing, there is no sale. The LOI must spell this out as a core condition to protect both you and the buyer. These conditions directly tie into how the final deal is structured, and it's worth learning more about understanding purchase price allocation in a business sale to see how it all connects.

How to Draft a Compelling Letter of Intent for Your Business

A good LOI is not written by dumping every possible term into one document. It works because it makes the next stage of the sale easier, not harder. The drafting job is to define the transaction, pin down the economics, identify the few clauses that must bind now, and keep the diligence process from turning into unlimited optionality for the buyer.

Just as important, sellers should draft or review the LOI in the order the deal will unfold. We see owners jump straight to the headline price and leave process terms for later. That is backwards. Once exclusivity starts, the process terms often matter as much as the valuation.

Step 1: Define the Transaction Type and What Is Included

Start with the structure. Is this an asset sale, an equity sale, or a purchase of selected assets plus assumed liabilities? The LOI should say exactly what the buyer is buying and what stays behind. If the draft says "business acquisition" without identifying the assets, contracts, vehicles, cash, debt, and assumed obligations, expect arguments later.

For many small and lower-middle-market deals, an asset sale is more common because the buyer can choose which assets and liabilities to assume. In a stock or equity sale, the buyer typically acquires the entity itself, which can mean taking on a wider range of historical obligations unless the documents allocate risk differently. That distinction is central to transaction structure, as summarized in the IRS discussion of asset acquisitions and practical deal guidance from the Corporate Finance Institute on asset vs. stock purchases.

For a FedEx ISP sale, spell out whether the buyer expects to acquire routes, vehicles, equipment, employee relationships, and any transition support from the seller. If financing is part of the plan, it also helps to understand how lenders typically view a business acquisition at GoSBA Loans's site, because financing assumptions often shape LOI timing and conditions.

Step 2: List the Core Economic Terms

The next section should state the purchase price and how it is paid. Do not stop at a single number. Break it into cash at closing, seller note, earn-out, holdback, escrow, assumed debt, and any working-capital or net-asset adjustments. If a term can change the amount you receive, put it in the LOI now.

A seller should push back on phrases like "customary adjustments" if nothing else is defined. In our review of LOIs, that kind of shorthand is where later disputes begin. A buyer may think it preserves flexibility; a seller experiences it as an opening for retrading.

A clean mini-example looks like this: purchase price of $3.0 million, with $2.6 million paid in cash at closing, a 45-day exclusivity period, and a 30-day initial diligence window with one 15-day extension only if financing and diligence are actively progressing. That is not the only workable structure, but it shows the level of clarity an LOI should have.

Step 3: Separate Binding and Non-Binding Clauses on Purpose

Many drafts fail at this point. The LOI should say which sections are non-binding expressions of intent and which sections are binding immediately. Most often, confidentiality and exclusivity are binding. Sometimes expenses, governing law, dispute venue, and access rights are too.

Do not rely on a sentence at the top saying the document is "non-binding except as stated." Label the binding sections individually and make sure the obligations are precise. Delaware courts, for example, have repeatedly focused on text and conduct when evaluating preliminary agreements rather than accepting labels at face value, as discussed in this Delaware-focused analysis of preliminary agreements and the ABA Business Law guidance.

Step 4: Set Diligence Boundaries Before You Sign Away Leverage

A workable LOI tells the buyer what they may review and how long they have to review it. Financial statements, tax returns, fleet records, customer or contract documents, employee information, and compliance materials are all normal categories. What you want to avoid is an undefined right to keep asking for new material without a decision deadline.

In our review of LOIs, the healthiest drafts pair broad enough access for verification with milestone discipline: an initial diligence period, a prompt list of follow-up requests, and a drop-dead date. That approach protects a serious buyer without giving an indecisive one unlimited optionality.

Step 5: Sanity-Check Closing Conditions and Walk-Away Rights

Finally, list the conditions that must be satisfied before closing. Financing, third-party approvals, accuracy of key facts, and no material adverse change are typical. In a FedEx transaction, transfer approval is central and should be stated clearly. If the buyer needs a lender, ask whether the financing contingency is broad enough to let them walk for almost any reason.

Before signing, do one hard seller-side check: if this LOI takes you off the market for 45 to 90 days, is the buyer committed enough, the price defined enough, and the diligence scope narrow enough to justify that loss of negotiating position? We see sellers miss this when they are relieved to have an offer in hand.

Navigating LOI Negotiations to Maximize Your Sale Value

Getting a Letter of Intent is a major milestone, but don't pop the champagne just yet. Now the work is just beginning. This is the critical moment where you turn a buyer's initial interest into a solid agreement that secures your financial future. As a FedEx ISP owner, how you handle the LOI negotiation can make a huge difference in your final payout.

Every clause in that document is a negotiation point. Once you have that first draft in hand, your job—alongside your advisor—is to dissect every line, find opportunities for improvement, and map out a counter-strategy. Never accept the first offer as-is. It’s almost always just their opening bid.

Responding to the Initial Offer

When that first letter of intent for business lands in your inbox, it's easy to get fixated on the price. Take a breath and see the offer for what it is: the first move in a strategic negotiation. How you respond sets the tone for everything that follows.

The buyer's initial offer will naturally lean in their favor. For instance, a buyer might ask for an overly long exclusivity period of 120 days or more. This isn't necessarily a sign of bad faith; they’re just trying to lock down the best possible terms for themselves.

Your counteroffer should be prompt, professional, and firm. If you have interest from other potential buyers, now is the time to mention that interest. You can respond with something like:

"We appreciate the offer and are excited about the potential to work together. However, given the strong interest we've seen from other qualified parties, a 120-day exclusivity period is not feasible. We can agree to a 60-day period to allow for focused due diligence, which should be more than enough time for a serious buyer."

This approach shows you're confident in your business's value and you understand the market. It immediately puts the negotiation on more even footing without being confrontational.

Fighting for the Terms That Matter Most

While the purchase price gets all the attention, some of the most important battles are fought over other terms. Holdbacks and earn-outs are two areas where sellers can easily leave money on the table if they aren't careful.

A holdback is a chunk of the purchase price that the buyer keeps for a set period after closing. The idea is to cover any surprise liabilities or breaches of your promises. A buyer might propose holding back 15% of the price for 18 months. As the seller, you want to push back on both the amount and the duration. A fair counter would be to suggest a 5-10% holdback for no more than 12 months.

Earn-outs, where a portion of your payout is tied to the business's future performance, carry even more risk for you. If an earn-out is on the table, you have to dig into the performance metrics. Are they realistic? Are they entirely within the new owner's control? Vague goals are a massive red flag. Always insist on clear, simple, and objective targets that can't be easily manipulated post-sale.

Maintaining Momentum and Urgency

Time kills deals. The longer a negotiation drags on, the more likely it is to fall apart. In 2026, that is still true even though owner interest in exiting remains elevated and measurable. One practical issue is preparation: many owners intend to sell but have not documented a real exit plan, a gap highlighted in the 2019 business owner survey. That is one reason disciplined buyers and sellers use LOIs to impose deadlines early instead of letting the process float. In choppier conditions, LOIs become even more valuable because they force both sides to define assumptions before sentiment changes, a point also discussed in this market-focused overview of what is a letter of intent.

To keep your deal moving forward, stick to the timelines you agreed on in the LOI. If a buyer asks for an extension on their due diligence period, don't automatically say yes. Ask for a compelling reason. A buyer who is dragging their feet might be getting cold feet or, worse, just looking for excuses to drive the price down.

Your broker should be in constant contact with the buyer's team, making sure both sides are hitting their deadlines for reviewing documents, applying for financing, and getting ready for the FedEx Ground approval process. Creating a sense of forward motion is one of the best ways to get a deal closed on your terms.

Common Pitfalls to Avoid After Signing the LOI

Signing the letter of intent is a huge milestone, but don't pop the champagne just yet. The time between the LOI and the closing table is where many deals fall apart. Think of it as the final, most delicate stretch of the race, where small stumbles can turn into deal-breakers.

The single biggest mistake a seller can make here is getting complacent. You've agreed on the big picture, but now the detailed work starts. The buyer is about to put your business under a microscope during due diligence, and any surprises can tank their confidence and put your price at risk.

The Danger of Diligence Surprises

The number one killer of deals post-LOI? Unexpected discoveries during due diligence. This isn't just about a single massive, hidden problem. More often, it's a series of small inconsistencies that paint a picture of a business that isn't what it seemed on the surface.

Hard data backs this up. One analysis of failed M&A deals showed that a stunning 21.5% collapsed because of non-financial diligence findings—things like operational gaps, contract issues, or compliance problems. Another 15.4% fell through after the buyer’s Quality of Earnings (QoE) report revealed disagreements over EBITDA. Those numbers show just how fragile a deal is, even with a solid letter of intent for business locked in. For a closer look at the data, you can explore the full M&A deal failure analysis on malbek.io.

Your best defense is total transparency. The goal isn’t to look perfect; it's to be honest and organized. A buyer who sees you’ve made a good-faith effort to disclose everything, warts and all, is far more likely to work through problems with you.

To avoid this pitfall, your preparation has to be airtight. Before the buyer’s team even gets access to your files, you should have already done your own "mini-diligence."

• Financial Records: Get your P&L statements, balance sheets, and cash flow reports in order. Make sure they are clean, accurate, and match everything you’ve presented so far.
• Operational Logs: Your vehicle maintenance records, driver files, and route settlement reports need to be complete and up-to-date. No gaps.
• Legal Documents: Pull together every contract you have—your FedEx agreement, truck leases, and any vendor agreements. Ensure everything is signed and neatly organized.

When you have everything organized in a secure data room, you control the narrative and project professionalism. It proves to the buyer you run a tight ship, and that builds incredible trust.

Letting Business Performance Slip

That 60- to 120-day window between the LOI and closing can feel like you're in limbo, and it's tempting to mentally check out. That's a critical error. The buyer isn't just looking at your past performance; they are watching your current operations like a hawk.

Any dip in revenue, drop in service levels, or the loss of a key driver can give them a legitimate reason to renegotiate the price—or walk away completely. The valuation in the LOI was based on your business being healthy and stable. You have to keep it that way.

Stay fully engaged to prevent this.

• Maintain Operational Excellence: Keep your focus locked on hitting your service targets with FedEx. Continue managing your team and making sure the fleet runs without a hitch.
• Communicate Proactively: If an unexpected problem pops up—a major truck repair or a route change from FedEx—tell the buyer right away. Hiding bad news is always worse than delivering it yourself.
• Manage Your Team: Your drivers and managers will sense something is up. Keep your key people in the loop (with an NDA, if needed) and focus on morale to prevent turnover.

The best strategy is to run your business as if you will own it forever, a mindset that helps you avoid common operational mistakes that are magnified under a buyer's scrutiny. See four crucial mistakes to avoid when selling a FedEx ISP business for more on those errors.

Losing Control of the Timeline

In any deal, time is the enemy. The longer a deal drags on, the higher the risk of "deal fatigue." Buyers get cold feet, market conditions shift, or new issues surface. Allowing the process to drift without a firm schedule is a classic pitfall.

The timeline in your LOI is your roadmap. It's your job, alongside your broker, to hold the buyer to those dates. If the due diligence period is set for 60 days, don't let it slide to 90 without a very compelling reason.

Here’s how to keep the deal moving:

• Set Up Weekly Check-ins: Insist on a regular call between your advisor and the buyer’s team. Use this time to track progress, answer questions, and clear any roadblocks.
• Respond Quickly: When the buyer requests information, get it to them within 24-48 hours. Rapid responses maintain momentum and show you're serious.
• Push for Key Milestones: Gently but firmly nudge the buyer to hit important deadlines, like submitting their loan application or finishing their operational review.

By actively managing the timeline, you prevent the deal from losing steam. You signal to the buyer that you’re committed to closing and expect the same from them. This disciplined approach is your best bet for making it to the finish line with your original LOI terms intact.

Frequently Asked Questions

What is the intent of a business LOI?

In a sale, the intent of a business LOI is to turn general interest into a defined transaction path. It states the proposed price, structure, diligence plan, exclusivity period, and main closing conditions so both sides can decide whether to move into full documentation. When someone says “business intent” here, they usually mean the practical purpose of this document, not a final legal commitment to buy or sell.

Is a Letter of Intent Legally Binding?

Usually not in full. Most LOIs are non-binding on the core deal economics, but certain clauses are often binding immediately, especially confidentiality, exclusivity, and sometimes expenses or governing-law provisions. The actual answer depends on the wording, not the label alone.

How do you write a letter of intent for a business?

Start by defining the transaction type and exactly what is being sold. Then state the purchase price and payment structure, separate binding clauses from non-binding business terms, set clear diligence boundaries, and list the conditions to closing. A good draft is short, specific, and hard to misread.

How does intent work once exclusivity and due diligence begin?

Once the LOI is signed, any binding exclusivity clause usually takes effect immediately, which means the seller is off the market for that period. The buyer then begins due diligence to test the assumptions behind price, assets, liabilities, and closing conditions. In practice, bargaining power shifts toward the buyer during this stage, so the seller needs tight deadlines, a defined diligence scope, and clear extension rules before signing.

Can I review multiple LOIs before signing one?

Yes. You can receive and compare as many offers as the market gives you before you commit. The smart move is to evaluate not just headline price, but cash at closing, contingencies, diligence timing, and how restrictive the exclusivity clause is.

How long does the process take after an LOI is signed?

For many lower-middle-market sales, 60 to 120 days is a common range, though regulated approvals or financing issues can extend that. In a FedEx deal, the buyer's approval process can be a major driver of timing. A dated milestone schedule inside the LOI is one of the best ways to keep the process moving.

Your Top LOI Questions, Answered

The most useful way to think about this stage is not as a legal quiz, but as a term sheet with consequences. Below are the terms sellers should nail down before signing.

Purchase price

This sets the economic anchor for the entire deal. If it is vague about adjustments, assumed liabilities, or contingent components, the seller risks discovering later that the actual value is materially lower than the headline number.

Payment structure

This explains how much is paid in cash at closing versus seller financing, escrow, holdback, or earn-out. If it is imprecise, the seller may accept a strong stated valuation but far less certainty of getting paid.

Exclusivity

This gives the buyer a protected no-shop period to complete diligence and draft final documents. If the duration or extension rights are loose, the seller can lose bargaining power in the market for weeks or months if the buyer makes insufficient progress.

Diligence scope

This defines what the buyer can review and how long the review lasts. If the scope is broad but the deadlines are soft, the seller invites delay, repeated requests, and more room for a price retrade.

Timeline

This creates milestones for diligence, document turn, financing, approvals, and closing. If the dates are missing or aspirational, the deal can drift until momentum and negotiating strength disappear.

Closing conditions

These identify the events that must happen before the parties are required to close, such as financing, transfer approvals, or no material adverse change. If they are overly subjective, the buyer may keep broad discretion to walk away late in the process.

Confidentiality

This protects your financial, employee, and operational information once disclosures begin. If it is weak or inconsistent with data-room sharing, sensitive information can remain exposed even if the deal dies.

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