How to protect yourself before signing the letter of intent

Table of Contents

What is a letter of intent (LOI)—and why does it matter?
What sellers often miss before signing the LOI
Yes, you can walk away after signing—but so can they
How to negotiate your LOI like a pro
How I help sellers protect themselves during the LOI phase
What happens after you sign an LOI
Why this phase is where brokers shine
Final thoughts

I’m Michelle Regner, founder of Business Brokers of America. I help business owners navigate every step of the sale—from organizing financials to negotiating the right deal—so they feel supported, informed, and in control. My mission is simple: to make sure you exit on your terms—with confidence, clean financials, and a strategy that protects what you’ve built.

You found a buyer. You’re excited. Maybe even a little relieved. But before you let your guard down or pop the champagne, there’s one crucial step that can make or break your deal: the letter of intent (LOI).

I’ve worked with hundreds of sellers over the years, and I can tell you—this is the moment where things can quietly start to unravel. Here’s what every seller needs to know before signing an LOI, and how to protect your business, your time, and your peace of mind.

What is a letter of intent (LOI)—and why does it matter?

A letter of intent (LOI) is a non-binding agreement that outlines a buyer’s intention to purchase your business. While it’s not a legal commitment, it carries significant weight—because once it’s signed, your business is typically taken off the market and you move into due diligence.

A well-crafted LOI will often include:

The total purchase price
How the buyer intends to finance the deal (e.g., SBA loan, seller financing, private capital)
The structure of the deal (asset sale vs. stock sale)
Timeline expectations
Non-compete or exclusivity terms
Transition plan, if applicable

It also gives a feel for the buyer—their background, values, goals, and how they’re positioned to complete the deal. This is an emotional sale, and the LOI is often the first chance to really understand who’s sitting across the table.

That said, the LOI doesn’t protect you. Either party can walk away at any time. That’s why it’s so important to stay in control of the process—keeping things moving, avoiding frustration, and making sure both sides stay aligned all the way through closing.

What sellers often miss before signing the LOI

Most sellers get fixated on the purchase price. But that number only tells part of the story. What really matters are the terms of the deal—and that’s where I see a lot of people get burned.

Before you sign, look closely at:

Down payment and financing structure. Are they using SBA lending? Seller financing? Private capital?
Asset vs. stock sale. This can significantly impact your tax situation.
Non-compete clauses. Be crystal clear on the terms and duration.
Exclusivity windows. These often lock you out of other offers for 30–90 days.
Contingencies. A vague “subject to satisfactory diligence” clause gives buyers an easy out.

Yes, you can walk away after signing—but so can they

The LOI doesn’t lock anyone in. Either party can walk at any time—and they do.

I’ve seen deals fall apart over the smallest things: personality clashes, misaligned expectations, even a buyer fishing for proprietary information under the guise of due diligence.

If I’m circling back to other buyers after one drops out, I need a clear reason. Otherwise, it sets off alarm bells and hurts your credibility.

How to negotiate your LOI like a pro

The LOI isn’t a formality—it’s your leverage point. Don’t be afraid to negotiate.

Here’s what you can (and should) review carefully:

Total purchase price and how it will be paid out
Down payment amount and whether it’s financed
Deal structure: asset vs. stock sale
Non-compete terms
Timelines for diligence and closing
Exclusivity periods
Transition plans and seller involvement post-close
Contingencies—especially vague ones

If the buyer doesn’t want to negotiate, that’s a red flag.

How I help sellers protect themselves during the LOI phase

This is where having an advisor really matters.

I help my clients:

Pressure-test buyers. Are they serious, or just info-mining?
Prep clean financials. Messy books can kill your deal.
Set boundaries. Know where you’ll flex—and where you won’t.
Stay on track. The LOI phase needs to move quickly—but more importantly, it needs to be managed carefully. Even small frustrations can stall a deal, which is why having the right broker to keep both sides aligned is key.

One of the wildest cases I handled:

We actually had a competitor recently. I knew he was a competitor, so we tried it really cautiously. He ended up asking a million due diligence questions on how they’re doing their marketing. I told my client, ‘Do not answer this section—we’ll address it in person.’ On the Zoom, he kept pushing—’so how are you doing your marketing?’—and I prepped her not to say too much. Ultimately, he backed out, saying it wasn’t a good fit and he didn’t get full disclosure on marketing. But we gave him a ton of information. In the end, we felt like he was digging for information on their success.

What happens after you sign an LOI

Once the LOI is signed, we head into due diligence—and the real scrutiny begins.

Here’s what buyers typically request:

3–4 years of financials
Trailing 12-month P&L
Customer concentration breakdown
Revenue by product/service line
Add-backs and owner perks
Inventory and asset valuation

If you’re not ready to hand over this info quickly and clearly, you’ll lose momentum—and maybe the deal.

Why this phase is where brokers shine

It’s not just about getting you a great offer. It’s about protecting the deal until it closes—and keeping both sides engaged and confident along the way.

I represent the seller, but I’m managing the buyer’s expectations and goals too. Because a deal done is a win for everyone. That’s the art of this work.

Final thoughts

The LOI is more than just a stepping stone—it’s your launchpad to closing. But only if you handle it with clarity, urgency, and the right people in your corner.

That’s where having the right team matters. At BBA, we guide you through this phase with clarity and control, helping you avoid missteps, manage expectations, and move forward with confidence. It’s not just about getting to the LOI. It’s about getting across the finish line.

More about Michelle Regner, Founder & CEO of Business Brokers of America

Michelle Regner is a powerhouse entrepreneur and business strategist with a proven track record of founding and successfully exiting three SaaS technology companies. As the Founder and CEO of Business Brokers of America, she’s on a mission to elevate business brokerage standards nationwide, also serving as President and Managing Partner at Business Brokers of Utah.

Drawing on her firsthand experience launching and scaling startups, Michelle offers unparalleled insight into the realities of small business ownership. She specializes in advising entrepreneurs on growth strategies, exit planning, and digital transformation, having coached dozens to leverage digital marketing, overcome obstacles, and build scalable operational systems.

A Silicon Valley native, Michelle’s entrepreneurial journey began after earning her B.A. in Business from Notre Dame de Namur University and a stint at Morgan Stanley. Her impact quickly gained national recognition, leading to features in Fast Company and being named one of the top business leaders by The Economist in 2014. She’s also a sought-after speaker and previously hosted a five-year podcast series.