Letter of Intent to Purchase a Business: What to Include

Short answer

An LOI sets the deal's key terms; most of it is non-binding, but exclusivity and confidentiality usually are.
Settle price, structure, working capital, seller financing and transition here, not later.
For SBA deals, about 90 days of exclusivity is common; tie it to buyer milestones.

What a letter of intent does

A letter of intent (LOI) is the short document where a buyer and seller agree on the main terms of a deal before spending money on lawyers, diligence and financing. Most of it is non-binding: either side can still walk away or renegotiate before the definitive purchase agreement. A few provisions, usually exclusivity and confidentiality, are binding. In practice, both sides anchor to the LOI, so the terms you accept here are the terms you'll likely close on.

What to include

Price and how it's paid: cash at closing, SBA loan, seller note, and whether the seller note is on full standby.
Structure: asset or stock purchase, and which assets and liabilities are included.
Working capital: the working capital peg and how customer deposits and deferred revenue are treated.
Purchase price allocation (in an asset deal), since it drives both sides' taxes.
Seller transition: length, pay and duties. SBA rules allow up to 24 months as a consultant.
Non-compete and non-solicit: Florida Statute 542.335 presumes a sale-of-business non-compete reasonable at three years or less.
Key conditions: financing, satisfactory diligence, lease assignment, license transition, key employee retention.
Exclusivity: length, what counts as a competing offer, and how it can be extended.
Timeline: diligence deadline, financing commitment deadline, target closing date.
Binding provisions: state explicitly which sections are binding.

Exclusivity: how long is reasonable?

For SBA-financed deals, buyers commonly ask for about 90 days of exclusivity, since lender underwriting, the independent valuation and SBA approval take time. Sellers should tie exclusivity to buyer milestones, like a financing commitment by a set date, so a slow buyer doesn't take the business off the market for months with nothing to show for it.

Watch-outs for sellers

"Standby" seller notes that quietly become paying notes in the purchase agreement, or the reverse.
A vague working capital target that becomes a price cut at closing.
Diligence conditions so broad they work as a free option for the buyer.
Automatic exclusivity extensions.

Watch-outs for buyers

Agreeing to a price before you've tested earnings against a 1.25x coverage ratio and a manager's salary.
Leaving the allocation open, then discovering the seller's tax plan conflicts with yours.
No protection for the seller's unpaid Florida taxes, which can follow the business under s. 213.758.

How I approach LOIs

Most of the money in a deal is won or lost in the LOI, not the purchase agreement. I write and negotiate LOIs the way a private equity fund does: price, structure, working capital, seller financing and transition all settled up front, so closing week holds no surprises.

FAQ

Is a letter of intent to buy a business binding?

Mostly not. Price and terms are typically non-binding, but exclusivity (no-shop) and confidentiality provisions are usually binding if the LOI says so explicitly.

How long should LOI exclusivity last?

For SBA-financed acquisitions, about 90 days is common, ideally tied to buyer milestones like a financing commitment date.

What should be in an LOI to buy a business?

Price and payment terms, deal structure, working capital, purchase price allocation, seller transition, non-compete, conditions, exclusivity, timeline, and which provisions are binding.

Sources

Austen Ebenger

Independent M&A advisor in Orlando. Wharton, NYU MBA, private equity, and owner of a Florida company he bought with an SBA 7(a) loan in 2025. More about Austen.

This guide is general information, not legal, tax or lending advice. SBA rules and Florida law change; confirm current terms with your lender, attorney and CPA.