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Business-sale letter of intent: questions to ask before signing
Understand the purpose of an acquisition letter of intent and the price assumptions, exclusivity and next steps owners should review.
Blue Aries Ventures · October 19, 2026 · 3 min read
An LOI sets the direction of the discussion
A letter of intent, often called an LOI, records proposed terms and the intended process for a transaction. It can help both sides identify important assumptions before spending more time on detailed diligence and definitive agreements. It is not necessarily a commitment to complete the acquisition.
The legal effect depends on the document and applicable law. Some provisions may be intended to bind the parties even when the proposed purchase terms remain conditional. Do not assume that a document described as nonbinding has no consequences; have your own lawyer review it before signing.
Read the assumptions behind the price
The headline should be considered alongside the proposed payment form, included assets or ownership interests, debt treatment, operating capital assumptions and remaining conditions. Terms that sound familiar can have different meanings in different documents.
Exclusivity also deserves attention. If the owner agrees to restrict discussions with other buyers, understand the duration, scope and any conditions affecting that restriction. A timetable should identify the work needed to progress, not simply express a hoped-for closing date.
A hypothetical misunderstanding
An owner sees an attractive amount in an LOI and assumes it will all be received at closing. Later discussions reveal that part of the amount was contemplated as deferred consideration and that the price assumed a certain level of operating capital.
The issue may have been visible in the original document but not understood. Clarifying those assumptions early can prevent wasted effort. This is a hypothetical example, not legal interpretation or a summary of terms used by Blue Aries Ventures.
Questions for your advisers and the buyer
- Which provisions are intended to be binding?
- What exactly is being bought, and what is excluded?
- How is the consideration expected to be paid?
- What conditions, approvals or financing steps remain?
- What does exclusivity restrict, and when does it end?
- Who bears which costs if the transaction does not close?
Use the LOI to build alignment
A useful LOI gives buyer and seller a shared starting point: what is being acquired, how the consideration is expected to work and what happens next. Resolving the main commercial assumptions early helps the detailed review stay focused and makes it easier to coordinate advisers and decisions.
Blue Aries Ventures discusses proposed terms in the context of your business and transition goals. The LOI is a step toward a purchase, with further review and definitive agreements still to follow. Have your lawyer explain which provisions bind you, then use the document to establish a clear, practical path forward together.