I want to use a Letter of Intent to make my offer on a small auto repair business. The seller's broker insists that I use his full Offer to Purchase agreement. I like the business, have completed my valuation, and my offer will be close to the seller's price, but it just seems more reasonable and customary to use an LOI as a first step don't you think?
There's no question that an LOI can be a logical approach as a first offer but by no means is it a standard step. In fact, it should be the exception. Personally, I like to move forward with a full blown Offer to Purchase contract versus an LOI wherever possible because it gets all issues onto the table for resolution versus a non-binding LOI.
An LOI is best used for:
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|Richard Parker is the author of: How To Buy A Good Business At A Great Price, the most widely used reference resource and strategy guide for buying a business. He has purchased ten businesses in his career and has helped thousands of prospective buyers worldwide learn how to buy the right business for sale. He is also founder and President of Diomo Corporation - The Business Buyer Resource Center.|