Selling a Business _ Why the Letter of Intent is So Important. A Letter Of Intent, or LOI, is an "intermediate" document drafted and submitted to you by the buyer.I say intermediate, because it is not the final contract. But it spells out the major elements of the sale the buyer and seller have agreed to so far. Typically, you will accept a Letter Of Intent and then enter into a period of exclusive negotiations with just one buyer. The Elements Of The Letter Of Intent.
When the buyer presents a Letter of Intent (LOI) instead of an Offer to Purchase, you do not have as strong of an offer and the percent of such offers that actually close will reduce. It is also difficult to get buyers to make an earnest money deposit on a Letter of Intent. The major problem is these agreements usually require that the seller cannot look at any other offers for a period of 30╉ days while the buyer is reviewing the records of the business. Many Letters of Intent will have a financing contingency. When the owner is offering substantial seller financing, there should be minimal contingencies for financing.