Trigger point for taking next steps: In addition to setting the key elements of the deal, the LOI is also a trigger point for critical milestones during process. Those trigger points are: For the seller to remove the practice from the market and focus on the single buyer. For the buyer and seller to begin conducting their due diligence. With agreement in principle on the main terms the seller will have more comfort in opening the books and sharing client information and the buyer will have more comfort in providing financial information.
The LOI as it is now used is a misunderstood application of poorly informed brokers and traders. A more proper application based on established custom and practice in International trade, going back even to the old medieval "Law Merchant" (Lex Mercantilis) isɅ. Buyer requests a quotation _ in modern usage this is an RFQ/Request For Quotation _ NOT an LOIǎ. Seller may then reply with a Quote. Buyer confirms receipt of quoted prices, and requests an OfferǏ. Seller replies with an offer (the firm or full offer is the so_called "FCO" in Internet Broker_speak).