Before You Sign an LOI, Ask This One Question
One Document Can Change Everything
You finally got the offer. A buyer is serious. They send over an LOI (Letter of Intent) — and it feels like the finish line is near.
But don’t celebrate just yet.
Because before you sign anything, there’s one question that can save your deal — and your sanity:
“Is this buyer qualified and committed to closing — or just locking me into exclusivity?”
Not All LOIs Are Created Equal
Most owners don’t realize: LOIs are often written to favor the buyer.
They lock you into exclusivity (meaning you can’t talk to other buyers), but they’re usually non-binding for the buyer.
That means:
- They can walk away without penalty
- They can renegotiate after due diligence
- And you’re stuck on the sidelines for 60–90 days… with no backup plan
If you’re not careful, that LOI becomes a trap — not a ticket to closing.
What to Look for in an LOI (Before You Sign)
Ask these before saying yes:
- Have they closed other deals before? Or is this their first?
- Are they backed by capital or financing — or just “planning to raise it”?
- Have they done due diligence already, or are they still fishing?
- Do they seem like a strategic, cultural, and financial fit?
- What terms are already clear — and what’s missing?
What to Do Now
Before you sign exclusivity:
- Talk to a deal advisor or M&A lawyer — even for a quick review
- Ask for a reverse diligence call — you interview them
- Make sure the LOI outlines timeline, financing, and clear next steps
Remember: It’s okay to walk away. A good buyer won’t rush you into a bad deal.
One Quick Win You Can Do Today
Start a “LOI Diligence Checklist” in a doc or notebook.
Write down:
- What would make you feel safe signing an LOI
- What red flags would make you say no
- The minimum you want spelled out in writing
Having this ready means when the offer comes — you’re not caught off guard.
Want help protecting your exit (and your peace of mind)?
Download the Exit Toolkit to prep your business and your strategy before you ever sign.
