The LOI is where leverage begins to shift
Do not defer the difficult terms until after exclusivity.
A letter of intent is often described as a preliminary document. Commercially, it is one of the most consequential documents in the sale.
Before the LOI, the seller may have several buyers. After signing, the selected buyer usually receives exclusivity. That means every unresolved term becomes harder to negotiate.
A strong LOI should define the purchase price and the form of consideration: cash, debt, rollover equity, earnout, or seller financing. It should explain the treatment of debt, cash, transaction expenses, and working capital. It should address the expected structure, financing, approvals, diligence scope, timing, management roles, restrictive covenants, and the principal indemnification framework.
If the owner will retain equity, the seller should understand the capitalization, governance, dilution, information rights, and exit mechanics. If the owner will remain employed, role, authority, compensation, and termination consequences should be clear enough to avoid a later surprise.
The LOI should also control the process: the duration of exclusivity, buyer milestones, access rules, confidentiality, expense obligations, and circumstances in which the seller can terminate exclusivity.
Not every purchase-agreement provision belongs in the LOI. But every term that could materially change value, risk, or the owner's post-closing life should be surfaced before competition ends.
The best time to negotiate a difficult point is when the buyer still believes it can lose the deal.