The Funnel, Ep. 11: What's an "LOI"?
As you move closer to selling your business, the questions stop being theoretical
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Show Notes
An LOI, or Letter of Intent, is a written document that outlines the basic terms under which a buyer proposes to acquire your business. It typically comes after initial conversations and early indications of interest, but before a definitive purchase agreement.
Importantly, an LOI is not the sale of your business. It is a framework that allows both sides to agree on major points—price, structure, timing—so the buyer can justify entering formal due diligence. While parts of the LOI may be binding, the transaction itself is not finalized at this stage.
Understanding this distinction is critical. Many founders either overestimate the security of an LOI or underestimate the constraints it creates once signed.