Letter of Intent in a Florida Business Sale: What to Include

What Is a Letter of Intent?

A letter of intent (LOI) is a preliminary agreement between a buyer and seller that outlines the basic terms of a proposed business sale before a definitive purchase agreement is drafted. Think of it as a roadmap for the deal: it establishes the price, structure, and key conditions that both parties will work toward during due diligence and contract negotiation.

An LOI is sometimes called a term sheet, memorandum of understanding, or indication of interest. Regardless of the label, its purpose is the same: to confirm that buyer and seller agree on the major deal points before spending significant time and money on due diligence and legal documentation.

What to Include in an LOI

• Purchase price and how it was determined
• Deal structure: asset sale vs. stock sale
• Assets and liabilities included/excluded from the sale
• Payment terms: cash at closing, seller financing, earnout provisions
• Earnest money deposit amount and escrow terms
• Due diligence period and access to records
• Exclusivity period (no-shop clause)
• Non-compete and non-solicitation terms
• Key employee retention requirements
• Closing date target and conditions precedent
• Confidentiality obligations

Binding vs. Non-Binding Provisions

Most LOIs are structured as non-binding overall, meaning neither party is legally obligated to close the deal. However, certain individual provisions within the LOI are typically binding:

• Confidentiality: Both parties agree to keep deal information private (binding)
• Exclusivity: Seller agrees not to negotiate with other buyers for a specified period (binding)
• Expense allocation: Each party bears their own costs (binding)
• Governing law: Florida law governs the LOI (binding)
• Purchase price and terms: Subject to due diligence (non-binding)
• Closing date: Target date (non-binding)

The distinction matters. If a seller violates a binding exclusivity clause by negotiating with another buyer during the no-shop period, they may face breach of contract liability even though the overall LOI is non-binding.

Common LOI Mistakes

1. Skipping the LOI entirely: Jumping straight to a purchase agreement without an LOI wastes time and money if buyer and seller are not aligned on basic terms
2. Making the entire LOI binding: This can unintentionally create a binding obligation to close before due diligence is complete
3. Vague deal structure: Not specifying asset sale vs. stock sale, or leaving payment terms undefined, leads to renegotiation later
4. Missing exclusivity period: Without a no-shop clause, the seller can use your offer as leverage with other buyers while you spend money on due diligence
5. No expiration date: An LOI without a deadline can drag on indefinitely

How Long Should an LOI Take?

An LOI should be negotiated and signed within 1 to 3 weeks of the initial offer. If negotiations drag beyond a month, it often signals that the parties are too far apart on key terms.

Once signed, the due diligence period typically runs 30 to 60 days, followed by purchase agreement drafting and negotiation. The entire process from LOI to closing usually takes 60 to 120 days for a straightforward small business sale.

At Barnes Walker, our attorneys draft and review LOIs that protect your position while keeping the deal moving forward efficiently.

Related: How to Sell a Business in Florida | Due Diligence Guide | Business Sale Attorney