Deal structure
Letter of Intent Checklist for Buying a Business
A buyer’s LOI checklist covering price assumptions, structure, working capital, financing, diligence access, exclusivity, transfer conditions, and what will be re-verified.
A practical research brief from the Business Buyer Check learning library.
Who This Is For
Business buyers and advisers deciding what to verify, what remains unresolved, and what should change before closing.
What This Checks
- Document the Economic Baseline
- Define Transaction Scope
- Set Access and Timing
- Address Financing and Third-Party Conditions
- Separate Binding Provisions
Document the Economic Baseline
- Price and whether it represents enterprise or equity value
- Normalized SDE or EBITDA and covered period
- Cash, debt, inventory, receivables, deposits, and working-capital treatment
- Cash at closing, seller note, earnout, escrow, and holdback
Define Transaction Scope
- Asset versus equity purchase
- Included and excluded entities, assets, contracts, and liabilities
- Real estate, lease, vehicles, equipment, intellectual property, data, and accounts
- Required licenses, permits, employees, and qualifying personnel
Set Access and Timing
Define the diligence period, data access, seller cooperation, site visits, professional review, and target closing. Preserve the right to revise or stop when evidence changes material assumptions, subject to counsel’s drafting.
Address Financing and Third-Party Conditions
Identify financing, valuation, lease assignment, landlord approval, franchise consent, customer or vendor consent, license approval, lien release, insurance, and regulatory conditions.
Separate Binding Provisions
LOIs commonly describe principal transaction terms as nonbinding while confidentiality, exclusivity, access, expenses, publicity, governing law, or other clauses may be binding. Language and jurisdiction matter.
Create the Re-Verification Baseline
Attach the facts that supported the offer and identify what will be refreshed before closing. Preserve versions so the buyer can see performance, record, license, lien, contract, employee, and customer changes since the LOI.
Illustrative Buyer Example
How a Buyer Would Apply This Guide
A seller’s headline earnings support the asking price, but the supporting records are incomplete. The buyer follows this guide to identify the missing inputs, reproduce the calculation, request independent support, model the downside, and convert unresolved items into offer protections rather than treating the claim as verified.
Classification: Illustrative analysis—not a live finding, valuation conclusion, or recommendation to buy.
Frequently Asked Questions
Is a letter of intent binding?
It depends on the language and law. Principal terms may be nonbinding while specified process provisions may bind the parties. Obtain legal advice.
Should the LOI include working capital?
Yes. State whether it is included and how the target and closing adjustment will be determined.
Can price change after diligence?
The answer depends on the LOI, definitive agreement, facts, and negotiations. Clear assumptions create a factual basis for addressing material changes.
This educational material is preliminary decision support, not legal, tax, accounting, lending, appraisal, or investment advice. Requirements and transaction terms vary; verify current rules with qualified advisers and official sources.
Recommended Next Step
Plan Pre-Closing Re-Verification
Create a baseline and identify what must be checked again before closing.
Plan Pre-Closing Re-VerificationYour next diligence questions
Continue Your Research Path.
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