Letters of Intent are the first step. LOIs are primarily used by businesses to outline specific terms.
What is a Letter of Intent?
A Letter of intent to purchase a business is a written document that has specific terms between parties before entering negotiations.
It is the pre-step before investing time and resources on a deal. Many LOIs are non-binding but can contain both binding and non-binding provisions. Fully binding LOIs contain terms with a clear intent to be bound.
Why Use a Letter of Intent
Letters of Intent provide an avenue for outlining basic terms, giving you a feel for what the purchase agreement may look like.
- Price, structure, timeline, and other terms can be part of an LOI
- LOIs are difficult to change and renegotiate after they have been set, even though they are non-binding. This is why having an attorney as part of the process or reviewing them is essential.
When to Use a Letter of Intent
There are many reasons why you should use an LOI.
If you are planning on purchasing a Texas business LOIs can be a good strategy
- Exclusivity- LOIs can include an exclusivity period where the seller cannot negotiate with other buyers until that period ends. This means you have a period of time where the seller is exclusively focused on you.
- Structure- LOIs can outline the basic structure of the deal and reach agreement on key fundamentals early. This saves time in the future which could be wasted on negotiations.
- Accountability- LOIs provide a framework for accountability on BOTH sides. Meaning, delays and a lack of structure are minimized.
Commercial Uses of a Letter of Intent
An LOI is incredibly helpful for commercial business agreements
- For example,
- Business acquisitions, real estate leases, setting expectations, confidentiality and exclusivity clauses, and many other uses.
- Commercial transactions are often complex and difficult- having an LOI with intentions and timelines as well as restrictions helps parties navigate the transaction.
Who Should Help Write or Read a Letter of Intent
- Business lawyers should draft and review LOIs to ensure terms are legally acceptable and avoid terms that could be harmful in the future.
- In business transactions the buyer with their lawyer typically prepares the draft to establish a relationship with the seller and set some base terms.
Here at ESS Law Partners we can help you write, edit, or proofread your Letter of Intent to make sure you are covering your bases and setting yourself up for the best deal. Protect your business now.
To learn more or schedule a consultation, visit our website esslawpartners.com or call us at 713-565-1353.
ESS Law Partners serves clients throughout Texas in personal injury, business law, and civil litigation matters.
Script for LOIs
Everyone says a Letter of Intent is non-binding.
That’s technically true… but it’s also where a lot of deals quietly fall apart.
A letter of intent, also known as an LOI, is the first real step in buying a business.
It lays out the basics before serious time or money is spent on negotiating a deal.
This is important because both sides see early on whether they’re actually aligned. If the price, structure, or timeline doesn’t work at this stage, it’s better to find out before investing months of work and legal fees.
LOIs might include things like price, deal structure, timelines, and even exclusivity.
And while most LOIs aren’t fully binding, some parts absolutely can be
Plus here’s the catch- once those terms are written down, they’re surprisingly hard to walk back. Even if the document itself says “non-binding.”
That’s why buyers usually draft an LOI with their attorney, to set the framework for the entire transaction.
If you’re buying or selling a business, getting the LOI right from the start can save you a lot of time, money, and frustration later.
ESS Law Partners helps clients draft and review LOIs so your deal starts on solid ground.
Learn more or schedule a consultation at esslawpartners.com.