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Selling Your Business: The Letter of Intent
Selling a business is a complicated process with many steps involved. There are items that need to be taken care of long before the parties execute a purchase agreement, including negotiations and a variety of preliminary documents such as the letter of intent.

​What is a Letter of Intent (LOI)?
​​The letter of intent outlines the basic terms of the sale of a business. It is usually prepared after a buyer and seller have had serious discussions about the sale of a business, but before the final contract is created. LOIs are not usually binding, although there could be terms within it that are binding, such as a clause prohibiting the seller from continuing to look for or negotiate with other potential buyers.

​Tips for Crafting a Letter of Intent
​If you are at the stage where it’s time to consider a letter of intent to sell your business, there are some recommendations you should consider.
  • Hire an attorney. In many situations, the buyer and seller don’t bother with an attorney at this stage in the negotiations because the LOI is nonbinding. But it makes sense to strategize with a lawyer at this state; it won’t cost very much in the overall scheme of things to have an experienced business attorney draft your letter of intent. Plus, if you hire an attorney at this stage, this will show the buyer that you are an educated seller. If you don’t have any experience selling a business before this one, having an attorney on your side will be an invaluable asset.
  • Draft carefully. Just because an LOI is generally nonbinding, this doesn’t mean you should throw something together without a lot of thought. Making drastic changes to the terms of the letter of intent before the final sales contract will not be viewed favorably. Binding or not, the LOI is a significant document between the parties involved. This is another reason why you should consider hiring an attorney to draft the letter for you to ensure you don’t leave out any important terms.
  • Negotiate during this phase. For sellers, the best time to negotiate is before the LOI is signed. Once it’s signed, you won’t have as much leeway. So be sure to include those terms that are important to you in the letter of intent after discussing them with the buyer.
  • Some provisions should be binding on both the buyer and seller. For example, as a seller, you’ll want to include a confidentiality clause in the letter of intent in case the sale doesn’t go through. Either party may want to include an exclusivity period, i.e., a period of time during which neither party is looking elsewhere for a better deal.
  • Be sure to make it clear which terms are binding and which are not. You don’t want to have a judge make that decision for you.
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Contact an Ohio Business Attorney Before Selling Your Business
Selling a business, you have worked hard to build is a major financial proposition that will have serious implications on your future. If you are at the letter of intent stage of negotiating a sale, it’s time to contact an experienced business lawyer.​
Pricing
​Letter of Intent: $1,700