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Letter of Intent

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The buyer (who sends this letter)

For a business, use its registered name, including "LLC" or "Inc." if it has one.
Used for written notices.

The seller (who owns the business)

For a business, use its registered name, including "LLC" or "Inc." if it has one.
Used for written notices.

The business and the deal

The name customers know it by, for example "Harbor Street Bakery." It may be the same as the seller's name.
What it does and where it operates, for example "A retail bakery and cafe operating at 12 Harbor Street."
In an asset purchase the buyer buys the equipment, inventory, name, goodwill and other assets and usually leaves the old debts behind. In a purchase of ownership interests the buyer buys the company itself, which keeps its assets and its liabilities.
For example, "the seller's personal vehicle, cash in the business bank accounts, and accounts receivable collected before closing."

Price and payment

With seller financing, the buyer pays part of the price over time under a promissory note to the seller.
For example, "5% of gross sales above 800,000 dollars in each of the first two years after closing, up to 100,000 dollars in total."

Due diligence

Counted from the date the seller signs this letter. 30 to 60 days is common for a small business.
If not, access is part of the non-binding proposal like the price and other deal terms.

The final purchase agreement

The date the business would change hands.
For example, "the Seller's key baker agreeing to stay on for at least six months."
For example, introducing the buyer to customers, suppliers and staff. Leave blank for none.

Exclusivity, confidentiality and costs

Counted from the date the seller signs. This promise is binding. It is often as long as the due diligence period or a little longer. It ends no later than the date this letter ends.

Deadlines and final terms

If the seller has not signed by then, the proposal lapses.
The letter also ends when the final purchase agreement is signed, or earlier if either side gives written notice.
These are non-binding, like the rest of the proposal.
Usually the state where the business operates.

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