Free Business Purchase Letter of Intent (LOI) Template

A business purchase letter of intent (LOI) is a short document setting out the main terms a buyer and seller expect to put into a final purchase agreement. It names the price, describes the structure of the deal, and lists the steps both sides will take before closing.

Buyers usually draft it first, after early conversations and a look at the financials. The seller then negotiates, signs, and the two sides move into due diligence.

This letter does not transfer the business by itself. Instead, it fixes the shape of the deal early, so neither party spends months on legal drafting before discovering they never agreed on price or scope.

Send a business purchase LOI once the conversation gets specific enough that both sides need the same numbers in front of them. Typical moments include:

• A buyer has reviewed the financials and wants an offer in writing.
• A seller is talking to several buyers and needs to compare offers on equal terms.
• The deal depends on financing, and a lender wants written terms before it will move.
• Due diligence will be expensive, so the buyer wants exclusivity before paying for it.
• An owner is selling to a family member, a manager, or an employee group and wants the terms recorded anyway.
• Several partners have to approve the sale, and they need something concrete to vote on.

Very small asset sales can skip it, since a short agreement handles them on its own. However, once staff, customer contracts, leases, or inventory move with the business, this letter earns its place.

A business purchase letter of intent (LOI) should answer the questions that would otherwise stall the first draft of the purchase agreement.

The Parties and the Business

Name the buyer and the seller in full, including any entity that will actually sign. Then identify the business itself by legal name, trade name, and location.

Purchase Price and Payment Structure

State the price and how it will be paid. Cash at closing, seller financing, an earn-out tied to performance, and any deposit all belong here.

What Is Included and Excluded

List the major assets that transfer, and be equally clear about what stays behind. Vehicles, real property, intellectual property, and cash in the bank are the usual points of confusion.

Due Diligence Period

Give the buyer a defined window to review books, contracts, leases, and staffing. Also say what the seller will provide and how quickly.

Financing and Other Conditions

Spell out what has to happen before closing. Loan approval, landlord consent to assign a lease, a clean inspection, and partner or board sign-off are common examples.

Exclusivity and Confidentiality

Note whether the seller agrees to stop talking to other buyers, and for how long. Confidentiality usually covers the financials and the fact that the business is for sale at all.

Timeline and Expiration

Set target dates for diligence, signing, and closing. Add an expiration date so a stale offer does not hang over either side indefinitely.

Say which structure you have in mind, because it changes nearly everything that follows. In an asset purchase, the buyer takes specific items — equipment, inventory, customer lists, the trade name — and the legal entity stays with the seller. In a stock purchase, the buyer acquires the entity itself, and what sits inside it comes along.

That choice drives which assets get listed, which contracts need consent before they transfer, and how the parties handle existing obligations. In addition, the two structures are treated differently for tax purposes, so both sides normally want an accountant’s read before committing.

Tip: If you are not ready to decide, write one line saying the structure will be settled during due diligence. Silence is worse, because each side will quietly assume the version that suits them.

Most of a business purchase letter of intent (LOI) is written to be non-binding, so neither party is obliged to close. A handful of clauses are the exception, and those are the ones to read twice.

Clauses that are commonly binding:

• Confidentiality — protects the financials, the customer data, and the news that the business is for sale.
• Exclusivity or no-shop — stops the seller from entertaining other buyers for a fixed window.
• Non-solicitation — keeps the buyer from approaching staff or customers if the deal collapses.
• Expense allocation — records who pays legal, accounting, and diligence costs.
• Governing law and dispute handling — states which rules apply and how disagreements get resolved.

Whether any of these hold up depends on the wording and on where the parties are based. Because of that, have a local attorney read the binding sections before you sign, and confirm the tax picture with your accountant.

A business purchase letter of intent (LOI) comes together quickly once you work through it section by section. Document Genius walks you through each one with simple questions.

1. Identify the Parties and the Business

Open with the date, then name the buyer, the seller, and the business being sold. Use consistent labels the whole way through.

2. State the Price and How It Is Paid

Give the number, then break it down. Deposit, cash at closing, financed portion, and any earn-out each deserve their own line.

3. Define the Structure and Scope

Say whether this is an asset or stock purchase, and list what transfers. Anything you leave out will be argued about later.

4. Set the Due Diligence Window

Give a start date, an end date, and a short list of what the seller will hand over.

5. List the Conditions to Closing

Write down every approval, consent, and inspection that must land before the deal completes.

6. Mark the Binding Clauses

Label plainly which sections bind the parties and which do not. One clear sentence here prevents most disputes.

7. Add Dates and Sign

Include an expiration date, sign, and ask for a countersignature. Afterward, both sides can move into diligence knowing the terms are agreed.