What Is a Letter of Intent (LOI) in a Website Sale?

What an LOI is

A letter of intent is a document, common on larger website and business sales, in which a buyer states their intention to purchase on outlined terms before full due diligence and the final contract. It signals serious intent, frames the key terms both sides have agreed in principle, and moves the deal from 'interested' to 'let's do this' — a milestone that justifies the deeper work ahead.

What it typically includes

An LOI usually spells out the proposed price and structure, the assets included, an exclusivity period during which the seller won't shop the deal to others, the expected timeline, and the conditions that must be met to close (chiefly successful due diligence). It's the shared reference point that keeps both sides aligned as the detailed contract is drafted.

Binding or not?

Most of an LOI is non-binding — the price and terms can still change based on what due diligence uncovers — but specific clauses, like exclusivity and confidentiality, are often binding. Understanding which parts commit you matters: agreeing to exclusivity, for instance, genuinely ties your hands for a period, so don't sign one lightly or with a buyer you don't take seriously.

How it moves the deal forward

Once signed, the LOI kicks off due diligence and contract drafting with agreed guardrails, reducing the chance of wasted effort or a renegotiation from scratch. For smaller sales it's often skipped in favor of going straight to a purchase agreement, but on larger deals it's a useful, deal-saving step. Treat it as a serious commitment of intent, and have a professional review anything binding before you sign.

What an LOI is and is not

A letter of intent records that both sides intend to transact on broadly agreed terms, and sets the framework for the diligence that follows. Most of it is deliberately non-binding: the price, the structure, the timeline are all subject to what diligence reveals. A few provisions usually are binding, typically exclusivity, confidentiality and who bears their own costs. Knowing which parts bind you is the whole point of reading it carefully.

Why sellers should want one

An LOI converts a vague expression of interest into a documented position before you open your books. It commits the buyer to a price range, which makes a late unexplained reduction harder to justify, and it sets a diligence period with an end date. Sellers who begin sharing financials on the strength of enthusiasm alone frequently discover the price was never really agreed.

The exclusivity trade

Buyers ask for exclusivity so they are not spending on diligence while you shop the deal. That is reasonable, and the negotiation is about duration. Thirty days is common for a small site, sixty for something larger. What to avoid is a long exclusivity with no obligation on the buyer to progress, because that takes your business off the market while giving you nothing in return.

Terms worth pinning down at this stage

Price and structure, including any holdback or earnout in outline. The diligence period and what access it covers. The intended closing date. Who pays escrow fees. Whether a non-compete is expected and roughly what scope. Settling these in the LOI is far easier than settling them later, when both sides have sunk time and the leverage has shifted.

How LOIs go wrong

The common failure is treating it as a formality, signing quickly, and discovering the exclusivity is ninety days or the price is expressed as a range whose bottom the buyer later treats as the number. The second failure is the opposite: negotiating the LOI so exhaustively that the deal loses momentum. It should take days, not weeks, and it should be specific about the handful of things that matter.