What actually goes in a Letter of Intent?

The key terms you need to include before due diligence

Author

Ben Kelly
November 20, 2025

Once you’ve found a business you want to buy, it’s time to make an offer.

That means writing a Letter of Intent (LOI) - the document that outlines the key terms of your deal before you move into due diligence.

Most first-time buyers don’t know what to include, so today I’ll break down the essentials.

The terms every LOI needs

1. Purchase price and structure

This is the big one. Make sure you include:

  • Total purchase price

  • How you’re financing it (SBA loan percentage, seller note, investor capital, your own cash)

Common structures look like:

  • 85% SBA + 10% seller note + 5% you/investor

  • 90% SBA + 10% you/investor

For your starting offer, begin 15-20% below the asking price on normal deals, and negotiate from there.

Most offers get rejected, and that’s totally normal!

But that’s why it's important to make your initial offer lower, so you can negotiate from a stronger starting point.

2. Exclusivity clause

This guarantees you’re the only buyer the seller is negotiating with during due diligence.

Without it, the seller can waste your time by using your offer to shop around for a better deal.

Always insist on exclusivity.

3. Key assets and agreements

Make sure you document terms for:

  • Client lists (who stays, who might leave)

  • Supplier contracts (what transfers to you)

  • Employee retention (who’s staying on, for how long, at what compensation)

These details matter because they directly impact cash flow after you take over.

4. Performance-based terms (optional)

If you and the seller disagree on price, you can include terms like a forgivable seller note.

For example: “If revenue drops below 95% of last year, a portion of the seller note is forgiven.”

This protects you while giving the seller incentive to ensure a smooth transition.

Get it in writing

Verbal agreements are worthless.

Everything you discuss with the seller (price, timeline, commitments) needs to be documented in the LOI.

This protects you from misunderstandings and flaky sellers down the road.

A strong LOI sets the tone for the entire deal, so make sure you get it right from the start, and you’ll be well on your way to closing your first deal!

Now, if you’re still looking for a business that could be a good fit for you, don’t worry - I’ve got you!

I occasionally come across high-quality businesses for sale that I think subscribers like you would be interested in.

And when I do, I send out an email with the details in case anyone wants to jump on it.

To opt in to those emails, just fill out this 2-minute survey:

Or, if you have a business you want to sell, tap the link below to share the details:

Onward,

— Ben Kelly