How to Write an LOI for an Online Business Acquisition (Free Template Included)

A letter of intent (LOI) is the document that turns a casual conversation about buying a business into a real deal in progress. It outlines the material terms of your proposed acquisition — price, structure, timeline, exclusivity — before either party commits to expensive due diligence or legal work.

Most first-time buyers either skip the LOI entirely (a mistake that leaves them exposed) or over-engineer it into a near-contract that scares sellers away. This guide covers what to include, what to leave out, what's actually binding, and what sellers look for when they evaluate competing LOIs.

What an LOI actually is — and isn't

An LOI is a non-binding expression of intent to acquire a business on specified terms. "Non-binding" means that if due diligence reveals material issues or the parties can't agree on final contract language, either party can walk away without legal liability — at least in theory.

The nuance: not all sections of an LOI are non-binding. Two sections are typically binding from the moment both parties sign:

• Exclusivity (No-Shop) clause: Legally prevents the seller from shopping the deal to other buyers during due diligence. This is the most important binding element — it's the reason sellers sign LOIs.
• Confidentiality clause: Prevents the buyer from sharing information learned in due diligence. Sellers need this to feel safe handing over financial records and customer data.

Everything else — price, structure, earnout, transition terms — is non-binding until the final Purchase and Sale Agreement is executed. But in practice, what's in the LOI is what closes. Trying to renegotiate major terms after LOI is a quick way to kill a deal and your reputation with brokers.

Key terms every LOI must include

1. Purchase price

State the total purchase price clearly. If it's subject to working capital adjustments or inventory at close, note that. Sellers need to see a number. "Competitive offer" or "market rate" language without a number signals you're not a serious buyer.

2. Deal structure

Break down how the purchase price is being paid:

• Cash at close (how much)
• Seller financing — amount, term, interest rate
• Earnout — amount and KPI triggers
• SBA or third-party financing (if applicable, note timeline implications)

For example: "$480,000 total consideration — $350,000 cash at close, $130,000 seller note at 7% over 36 months."

3. Earnout provisions

If you're including an earnout, define it precisely. State the metric (monthly revenue, SDE, customer count), the measurement period, the payment schedule, and who has the right to audit. Vague earnout language like "based on future performance" is unenforceable and will be stripped out by the seller's attorney.

4. Transition period

Define what happens after close. Most online business acquisitions include a 30–90 day transition period where the seller provides training and support. Specify:

• Duration (e.g., 60 days post-close)
• Hours per week (e.g., up to 10 hours/week)
• Format (calls, email, async documentation)
• Whether it's included in the purchase price or compensated separately

5. Exclusivity period

Request 45–60 days of exclusivity. For SBA-financed deals, request 75–90 days to account for lender processing time. Sellers on platforms like Empire Flippers are accustomed to 60-day exclusivity windows; anything longer requires a stronger justification.

6. Confidentiality

Include a standard mutual NDA within the LOI itself, or reference a separate NDA that both parties have already signed. Confirm that the buyer will not share financial details, customer lists, or proprietary information learned in due diligence.

7. Due diligence conditions

State that the LOI is subject to satisfactory completion of due diligence. List the primary items you need access to: 24 months of P&L, traffic analytics, customer data, tool access, and any third-party contracts. This prevents the seller from claiming you accepted the deal without seeing full financials.

What sellers look for in an LOI

Sellers — particularly those who've been through a deal before or are represented by a sophisticated broker — evaluate LOIs across three dimensions:

• Certainty of close: Is the buyer serious and capitalized? All-cash LOIs with proof of funds rank highest. SBA LOIs with a pre-approval letter rank second. LOIs with no financing proof signal wasted time.
• Fairness of terms: Is the offer within a reasonable range of listed price? Buyers who lowball by 40% on a well-documented listing with multiple interested parties get ignored. Sellers share notes with their brokers.
• Clarity and professionalism: A clean, well-structured LOI signals a buyer who will be easy to work with through due diligence. Typos, vague language, and missing sections signal the opposite.

Competing against other LOIs is common on vetted platforms. Your differentiator is often not price but structure — a seller might accept a slightly lower price from a buyer offering all-cash over a higher offer with a long SBA timeline and an earnout they don't trust.

Common LOI mistakes to avoid

• Leaving out the deal structure: If you just state the price and no breakdown, the seller doesn't know how much cash they're getting at close.
• Requesting too long an exclusivity period: Asking for 120 days of exclusivity on a first LOI tells the seller you're disorganized or haven't lined up your financing.
• Making the LOI binding beyond exclusivity and NDA: Some buyers inadvertently draft LOIs that look like purchase agreements. If a seller's attorney sees this, they'll redline it down to basics anyway — wasting everyone's time.
• No due diligence conditions: Omitting this exposes you to claims that you accepted the deal without conditions.
• Renegotiating the LOI price at close: Unless due diligence reveals material misrepresentation, trying to cut the price after the LOI is signed is a deal-killer and will get you blacklisted by brokers.

Timeline after signing the LOI

1. Day 1–3: Both parties sign the LOI. Exclusivity begins. Seller removes the listing from active marketing.
2. Day 1–7: Buyer delivers a due diligence request list. Seller provides access to financials, analytics, and documentation.
3. Day 7–30: Core due diligence period. Financial review, traffic and revenue verification, technical audit.
4. Day 30–45: Attorneys draft and negotiate the Purchase and Sale Agreement based on LOI terms.
5. Day 45–60: Final signatures, fund transfer, asset transfer. Deal closes.

For SBA-financed deals, add 30–45 days to this timeline to account for lender processing after the LOI is signed.

Get a done-for-you LOI template

Deal Alert AI's SBA Acquisition Pack includes a professionally drafted LOI template built specifically for online business acquisitions — pre-built sections for deal structure, earnout, transition terms, and SBA financing timelines. It's the same LOI framework used in real deals on Empire Flippers and Acquire.com. Before writing your LOI from scratch, use our free deal analyzer to verify the business fundamentals and make sure the price you're putting in the LOI is defensible.