A business purchase letter of intent (LOI) is a letter sent to show the intention to buy a privately held company. It helps parties understand they are on the same page concerning the acquisition of the seller’s business. The parties use the letter to agree on the main terms of the business purchase such as price, exclusivity period for the buyer, closing date and terms. This guide shows how to draft a free printable letter of intent template to acquire a business and where to find a good template.
Last Updated: October 2026. This guide is reviewed and updated regularly to reflect current law. If you notice an error or outdated information, please contact us.
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Either party might decide to construct a short or a long LOI, depending on how many details they want to outline. A short LOI covers only the main points. A long LOI goes through the deal in detail.
Long LOI. Long LOIs are drafted more thoroughly and are more comprehensive. Their advantages are:
Short LOI. Short LOIs generally touch on only the most important details, such as the purchase price and some other terms. Their trade-offs are:
An LOI to acquire a business can have a different length, which is why contents might differ as well. But what will be most likely included in a LOI is:
If you want to see how all these provisions should be outlined in an LOI, use our free letter of intent template.
The buyer will most likely want the LOI to be short, especially if they offer a lot of benefits for the seller. Such a letter will provide the buying party with a long exclusivity period, letting them discuss in detail the purchase or merger agreement.
They will generally agree to first perform due diligence before agreeing to all key terms of the letter. However, the parties might also decide that the buyer agrees to the key terms, and if any problems arise throughout the due diligence period, the parties will renegotiate certain provisions.
Some situations might call for a detailed LOI, which will help the buyer spend less money and management resources on the transaction that might not be completed.
From the seller’s perspective, the company is interested in making the LOI as detailed as possible. It is connected with the fact that when the parties sign the LOI, the exclusivity period is granted to the buying party, which means they get the advantage in the situation.
For the seller, it might be considered as a “lock-up” as they will be unable to talk to other buyers. This is why they would want to think twice and get the fullest picture of the deal before signing the letter.
As well as that, making a comprehensive LOI makes it easier to hold the negotiations of the purchase agreement successfully.
The LOI to acquire a business might have a short and a long form. The steps below follow the long form. Go through them in order and write each part in plain words.
Step 1 – Effective date and subject
Start the LOI with the date of the letter and the purpose of its creation. Say that this letter is the basis for a formal agreement between the parties.
Step 2 – Parties and business entity
Next, give the names of the parties along with the name of the business entity to be sold.
Step 3 – Purchase price
Write the price for the business both in numbers and in words. The section might also indicate that the entire ownership of the business will go to the buying party (or another option if the parties agree so).
Step 4 – Real estate
Next, add the location and legal description of the real estate that belongs to the business entity. Write the purchase price of the property in numbers and in words as well.
Step 5 – Moment of payment
The next section should tell when the price for the business will be paid. Methods might not be mentioned as they will be included in a more comprehensive business purchase agreement.
Step 6 – Binding effect
The LOI should explicitly tell whether it is legally binding or not. If it is legally binding, it will entail all the legal consequences of breaching its terms. If it is not, the buyer and seller will not be bound by the LOI.
If the parties chose to make the LOI legally binding, they should include the provision that would say that there is no need to create a formal agreement in the future.
Step 7 – Bank accounts
Say that the seller keeps the needed bank accounts running and, for this purpose, leaves a certain amount of money across all the accounts.
Step 8 – Actions of the seller
This paragraph puts an obligation on the seller to act in the best interest of the business during the purchase process. The seller also avoids anything that could disrupt the normal operation of the company.
You can also add a sentence that this provision stays in force after the closing of the transaction.
Step 9 – Closure of the deal
The section should state what constitutes the closing of the transaction. The closing date might be after the signing of the formal contract (for non-binding LOI) or after meeting the terms of the LOI.
Step 10 – Costs of the closure
This paragraph shows who will pay the closing costs. The buyer and seller might divide them, or it might be the full responsibility of the buyer.
Step 11 – Termination
Add the date when the letter ends if the buyer and seller don’t sign a formal contract within a certain period after the date of signing of the letter.
Step 12 – Access to data about the business
Say that once the letter is executed, the buyer, along with the third parties the buyer authorizes, can access information about the purchased company. You can also add that the buyer takes an obligation to keep the information confidential.
Step 13 – Conditions
The section might state that the buyer has an obligation to enter into a formal agreement within the specified period of time; the buyer must review and approve all the materials provided by the seller throughout the due diligence process; the seller has the right to perform due diligence in the ways and time period necessary for them; the buyer has the right to hold negotiations with any third party regarding the acquisition of the business within due diligence.
Step 14 – Confidentiality
Add a statement that the details of the transaction discussed by the parties are confidential. Only a limited circle of people can access the information. The information can be released only with the consent of the owner or in situations required by law.
Step 15 – Good faith negotiations
Here, the parties state that they agree to negotiate in good faith and take an obligation to act truthfully and diligently during the purchase process.
Step 16 – Exclusivity
The seller and buyer agree that after they sign the letter of intent, they will not hold negotiations with any other party. It might be irrelevant only in cases when either party has any existing contracts in place.
Step 17 – Currency and governing law
The currency agreed upon by the parties and the law they will deem governing should be included here.
Step 18 – Severability clause
Add a clause saying that if any provision in the document is invalid, the other provisions of the letter stay in place.
Step 19 – Counterparts and electronic means
The second to last paragraph might state that the letter of intent can be drafted in several copies that will have the same legal effect. The provision might also tell what can be considered the delivery of the letter.
Step 20 – Signatures
End the letter with the signature of the parties. Add the date of signing and the printed names of both seller and buyer.
To get a customized business purchase letter of intent template, use our online document builder. It asks a set of questions about the business that is about to be sold or purchased. Answer them carefully, and your template is ready in up to ten minutes.
The sample below shows an LOI to buy a small company. It uses made-up names, a sample address line for each party and made-up amounts. Replace them with the details of your own deal when you write your letter.
From: Ginger Bread
345 Gartner Ave.
Austin, TX 78723
April 4, 2021
To: Sonya Cap
53 Greenview Drive
Calliham, TX 78007
Re: Intent to Purchase a Business Entity
This letter of intent to purchase business represents basic terms agreed upon by Buyer and Seller:
Buyer: Ginger Bread Dated: 04/04/2021
Seller: Sonya Cap Dated:
These short answers cover common questions about a letter of intent to purchase a business. Use them with the contents list, the steps and the sample letter when you write your own LOI.
This purchase letter of intent can be binding if the parties agree so. It will mean that it is enforceable, and the sale should be completed by the end date. If the buyer does not pay the entire sum prior to the agreed date, they might lose their earnest money deposit.
A letter of intent usually names the buyer, the seller and the business. It also states the purchase price, the type of deal and the due diligence period.
It depends on the deal. Buyers often prefer a short letter that gets talks moving. Sellers often prefer a detailed letter that gives them the fullest picture before they sign.
Gather these details first:
With these details at hand, the business purchase agreement that follows the LOI is easier to prepare.
The deal structure tells whether the buyer takes the shares of the company or only its assets. A share deal follows the pattern of a stock purchase agreement. An asset deal follows the pattern of an asset purchase agreement. The LOI sets this structure early, so both sides plan the next steps in the same way.
After the LOI, the parties work toward a definitive agreement, which is the final purchase contract. The LOI sets the main terms of that contract and gives both sides a clear starting point. A buyer who also needs a plan for the company after the sale can build a business plan in the meantime.
General information, not legal or tax advice.
