READY FOR JASON: Ask Page — What is a letter of intent (LOI) in M&A?

FINAL DRAFT

Short answer: An LOI is a non-binding document from a buyer that sets out the proposed deal structure, price range, and key terms. It is also the document that locks you into exclusivity and marks the point where your negotiating leverage drops sharply.

An LOI typically covers: proposed enterprise value or price range, deal structure (all cash, equity rollover, earn-out), exclusivity period (typically 30 to 60 days), key conditions (financing, diligence), treatment of existing management.

The LOI is described as non-binding. That is mostly true on price, but do not treat it as draft. The terms you agree at LOI become the floor for the final deal, not a starting point. Buyers will move from LOI terms during diligence, almost always downward.

The exclusivity clause is the most important provision most founders underestimate. Once signed, you cannot talk to other buyers while due diligence runs. If diligence is slow or the buyer re-trades, you are stuck. Push for the shortest exclusivity period you can negotiate (30 days is achievable with a motivated buyer).

Negotiate the LOI as hard as the final agreement. The conversations that do not happen at LOI stage almost never happen later.

Related: How do I negotiate a software company acquisition? | How long does it take to sell a SaaS company?

-- Drafted by Bolt 17 Aug 2026 | Part of W1 Ask Page Batch 3