A letter of intent (or LOI), when it comes to business, helps to set up expectations of the buyer and seller. It may also address any concerns about customers, partners and vendors. They can be used to help the negotiating terms of a business transaction so both parties fully understand what is brought to the table. Both the buyer and seller benefit from a letter of intent, because it adds transparency to a deal.
While a letter of intent can certainly help a business deal, it’s important to know when to use it during negotiations as well. Especially when you’re the seller of the business, getting a letter of intent from a prospective buyer as soon as possible can seem tempting. Business owners typically think it’s best to immediately learn the price and terms of the prospective buyer.
However, signing an LOI too early can lead to selling yourself short. A buyer that comes to the table early with a letter of intent often will not fully understand the growth opportunities your business holds. They also are likely to not have all the necessary information to make an informed decision about their buying price and terms. Their limited understanding of your business can lead to a price that isn’t fair to what your business is truly worth.
Although an initial offer can be exciting in this instance, it’s important to work with professional business brokers to ensure all information is transparent and aids in the valuation of your business.
When it comes to small business deals, one party’s preliminary commitment through a letter of intent is excellent to have, but not legally binding. Although an LOI certainly is a legal document and should always be carefully reviewed by both parties, it’s not actually legally binding. So, for small businesses, although they aren’t legally required, they’re still highly recommended. As the seller, it’s recommended to only look at deals that have an LOI to express interest in buying your business.
It might seem like the obvious decision, but an unfortunate mistake that some entrepreneurs will make is signing an LOI too early. By working with business brokers who can help do a valuation of your business, you’ll know better what your business could be worth, helping you to not leave any money on the table.
If you’ve looked into selling your business, then you may have seen both a letter of intent and purchase agreement come up as parts of the sales process. However, they have some distinct differences that are important to understand as the seller when you start getting offers.
By reviewing these differences, and depending on what stage in the sales process you are, you can know whether it’s more important for your business to receive either a letter of intent or a purchase agreement. By working with business brokers, involved parties can also settle on definitive agreements and the corresponding paperwork at every step of the process. This is especially important when reaching steps requiring attorney review.
By working with Advanced Business Brokers, you can take out the stress of understanding letters of intent. Whether you need to craft one for buying a business or need to understand the key points of one that has been submitted to you, ABB can help. We help all parties involved in business deals to know the fundamental terms of binding agreements, main points of business transaction paperwork, develop a clear roadmap for the process, and more. Give us a call today to schedule a consultation and take a step further with understanding letters of intent!
If you’re thinking about selling your business and don’t know where to start, consider speaking with our team here at Advanced Business Brokers. We specialize in brokering and advising exit plan strategies for various sizes/sectors of businesses.
With over 25 years of dedicated experience, Bob empowers small business owners in the Indianapolis metro area to achieve their entrepreneurial visions, whether by building scalable operations or crafting highly sellable entities. For three decades, he’s cultivated a robust network of owners, buyers, and strategic partners, a resource he fully leverages to help clients meet their unique objectives.
Bob’s expertise spans a diverse range of industries, including trade-based businesses like construction, HVAC, skilled trades, and manufacturing, as well as white-collar professional service firms such as law, finance, marketing, and technical services. Beyond his client work, Bob actively contributes to his community, serving as Treasurer for the Boone County Chamber Board and as well as a board member for both the Central Indiana Police Foundation (CIPF) and Fiscal Sponsorship Allies (FSA).
Bob holds a degree in Mechanical Engineering Technology from Purdue University in West Lafayette, Indiana, and teaches there as well in the Certificate in Entrepreneurship and Innovation Program, which is ranked among the Top 50 programs in the U.S.
He lives with his wife Lori in Zionsville, just outside Indianapolis, and in his free time, he enjoys working on his home, playing golf, and traveling.
With a degree in psychology and a professional background in social work, Marissa
brings a people-centered lens to every project. Her experience includes being a Project
Planning Specialist at GE Aerospace, creating efficient processes and structures that
help teams work smarter and stay aligned. Marissa joins the Main Street Market Maker
team with Advanced Business Brokers to dedicate time and attention to smaller
business opportunities and provide excellent and supportive customer service.
Outside of work, she is a mom of three young men who finds joy in the everyday chaos
of family life. She loves strong coffee, warm beaches, and any excuse to spend time in
the sunshine. Hot yoga and hammocking are some of her favorite ways to reset and
stay grounded and help her show up with more presence both at home and in my
professional life.
Steve brings more than 20 years of experience as a legal and financial professional to
his work with business owners preparing for transition and sale. He advises owners and
their families through every stage of the exit planning and transaction process, with a
focus on thoughtful assessment, risk management, and strategic value enhancement.
Steve is a Certified Exit Planning Advisor (CEPA®) and an active member of the Exit
Planning Institute. He previously served as Director of the Small Business Development
Center in Toledo, Ohio, where he worked closely with entrepreneurs across a wide
range of industries on growth, financing, and succession planning initiatives.
Earlier in his career, Steve practiced law with a nationally recognized Chicago-based
law firm and held roles in capital markets and commercial banking with leading financial
institutions. This multidisciplinary background allows him to approach business
transactions with a practical understanding of legal, financial, and operational
considerations.
As a business broker, Steve specializes in industrial and manufacturing companies,
skilled trades, and professional service firms, including marketing, staffing, and financial
services businesses. Steve earned his Juris Doctor from Loyola University Chicago
School of Law and a bachelor’s degree in economics from the University of Notre
Dame. He lives in the Toledo area with his wife and two daughters. Outside of work, he
enjoys traveling, cooking, and spending time at his family’s lake house.
A lifelong resident of Fort Wayne, Indiana, Dr. Mark Hagar brings decades of hands-on experience in small business ownership, acquisitions, and turnarounds to his role as a business broker. Over his distinguished career, he has acquired and operated more than 20 companies and engineered over 50 successful turnarounds, giving him a uniquely practical understanding of what makes businesses succeed, and sell. His portfolio spans manufacturing, distribution, and service firms in industries including printing, education, military contracting, aerospace, and orthopedics. This diverse background enables him to identify value, anticipate buyer needs, and structure complex deals with confidence and precision.
Mark holds a Doctorate in Business Administration (DBA) from Cranfield University’s School of Management in Bedford, England—one of Europe’s leading business schools. His research on small business resilience and operational excellence has been recognized by the Small Business Institute (SBI), the United States Association for Small Business and Entrepreneurship (USASBE), and the International Council for Small Business (ICSB).
In addition to his business career, Dr. Hagar has served as a member of faculty at several institutions of higher education, including Holy Cross College (Notre Dame), Trine University, and the University of Saint Francis. He also hosted Your Business Matters, a small business–focused radio show and podcast for more than a decade and is the author of Small Fortunes – the Acquisition Entrepreneur’s Guide to Buying a Profitable Small Business.
A passionate advocate for entrepreneurs, Mark previously chaired the Indiana Leadership Council for the National Federation of Independent Business (NFIB), representing small business owners before state and federal legislators. He currently serves as President of the Allen County, Indiana Economic Development
Commission.
As a broker, Mark specializes in industrial, manufacturing, and distribution firms, with particular expertise in special situations, distressed assets, and complex transitions where experience, creativity and discretion are central to success.