The five LOI mistakes

Connectivity map for the five failure modes

• 2.4 Concept: The five failure modes The core concept in common loi mistakes
• Making It Too Complicated: Making it too complicated Some buyers treat the LOI like a purchase agreement. They submit 15 pages with detailed indemnification terms, extensive reps and warranties, and legal language the seller needs an attorney to decode. This backfires. It scares the seller, s (A seller who receives a 15-page LOI from a first-time buyer )
• Locking Into A Number You Cannot: Locking into a number you cannot defend Some buyers think stating a firm price with no adjustments signals confidence. It does not. It creates a trap. When diligence surfaces something that affects value (and it always does), you either pay the original price for a business worth
• Promising Timelines You Cannot D: Promising timelines you cannot deliver SBA financing typically takes 60 to 90 days. If you promise a close in 21 days with SBA financing, you have created a credibility problem that will shadow the entire diligence process. Be honest about your timeline, even if that is less com
• Leaving The Transition Vague: Leaving the transition vague An LOI that says 'seller will assist in transitioning the business' without any specifics is not a transition plan. It is a conflict waiting to happen. Define what the seller does, how many hours per week, what they are paid if anything, ho

• The five failure modes feeds Making it too complicated: Making it too complicated supports the five failure modes.
• The five failure modes feeds Locking into a number you cannot defend: Locking into a number you cannot defend supports the five failure modes.
• The five failure modes feeds Promising timelines you cannot deliver: Promising timelines you cannot deliver supports the five failure modes.
• The five failure modes feeds Leaving the transition vague: Leaving the transition vague supports the five failure modes.