LOI (Letter of Intent)

Definition

A mostly non-binding letter agreeing price and key terms; it starts exclusivity.

Why It Matters

Most of it is non-binding, but the exclusivity clause is not, and that is the part that counts: once signed, the no-shop clock starts and so does real money on legal, quality-of-earnings, and lender fees. Settle the headline price here, because reopening it after you have spent that money is where the bargaining power quietly slides to the seller.

In numbers: A two-page LOI at $1.5M with a 60-day exclusivity window and financing and diligence outs opens the books; everything in it except exclusivity and confidentiality stays non-binding.