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.
- An LOI states a buyer's intent and agreed terms pre-contract.
- It covers price, assets, exclusivity, timeline, and conditions.
- Mostly non-binding, but exclusivity/confidentiality often bind.
- Common on larger deals; smaller sales often skip straight to contract.
An LOI anchors on a price — make sure it's a fair one. Get a free valuation so you negotiate the terms from a position of knowledge.
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