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A
letter of intent from a purchaser is like getting an offer from someone who
wants to buy your home. You know how much they are willing to pay, how they want
to structure the transaction, and what stands in the way of closing the deal.
In
most cases, we will see more than one LOI during the marketing process. Each one
will be analyzed and ranked in order of preference. There are several factors to
consider besides price. You will have to determine which one best fits your
desired outcome.
This
is where negotiation starts in earnest. Every detail of the LOI must be reviewed
and digested. You have to choose your battles carefully. We will work with you
to determine absolutes - the deal breakers - as well as the points that you
don't like but can be flexible on.
You
will want the final LOI to be as detailed as possible. Let's make sure that all
of the deal details are ironed out in advance. This is the time to make sure
that this is the best possible outcome of your exit plan. You will need to go
over tax implications with your CPA, wealth preservation with your wealth
planner, and you will need to discuss it with key management and your family.
Once
you have negotiated an acceptable LOI, both parties sign and the real work
begins. At this stage we always remind our clients that now is not the time to
put your business operation aside as you work to close the deal. If you start
running your business for the deal, you will usually end up with no deal - and
maybe no business!
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