Chapter 19: Final Bids and Letters of Intent (LOIs)

What sellers often miss

Many owners believe the highest offer automatically represents the best buyer. In reality, the best buyer is often the one most likely to close on the agreed terms. A buyer with a realistic valuation, clear financing plan, and reputation for honoring commitments may ultimately deliver a better outcome than a buyer whose headline valuation depends upon significant adjustments during diligence.

The takeaway

Treat the LOI as one of the most important negotiating stages in the entire transaction. Understand that leverage declines significantly once exclusivity begins. Negotiate key terms carefully, select your buyer thoughtfully, and enter exclusivity only after creating the strongest possible foundation for a successful closing.

Figure from the book · Chapter 19

Illustrative, not your deal. Where the book uses dollar figures, they are there to show how something works, not to describe your business. Your banker, your accountant, and your attorney will put real numbers to your own situation. Full note.

Terms this chapter uses

• Diligence (due diligence)
• Earnout
• Escrow (holdback)
• Exclusivity
• Letter of Intent (LOI)
• Retrade
• Rollover equity
• Seller note