In our last post in our buying and selling series, the buyer participated in their second meeting and review of the company with the broker and seller. The buyer is now ready to submit a letter of intent (LOI) to the seller with the help of their broker.
The LOI will outline the ideal specifics of the deal structure inclusive of the following information:
- The price the buyer is willing to pay.
- How those funds will be received.
- The timeline of the transaction.
- Any training and transition requirements of the seller.
- A non-compete agreement.
- The length of the due diligence period.
While the LOI is not a binding contract, it is an extremely important tool to get the buyer and the seller on the same page so they can move forward eventually to a binding closing contract. The LOI also includes a good faith deposit from the buyer, which is held in escrow by the transactional attorney (broker's attorney). Because this is a non-binding contract the buyer can back out of this agreement at any time and for any reason during the Due Diligence period. If the buyer backs out they will receive a full refund of their deposit.
For more information on submitting an LOI and the process of buying and selling a business in Colorado please schedule a complimentary consultation with one of our brokers today!
Rachael Holstein joined the Transworld Team in 2016 as Marketing Coordinator. Her working experience has been largely focused on Business Development and Marketing in the finance, architecture, property management, and information technology industries. A long time resident of Cleveland, Ohio, she attained her Undergrad from John Carroll University and a Master's Degree in Global Interactions from Cleveland State University. She relocated to Denver in 2013 for a change of scenery and a bit of adventure.