If you\u2019ve ever explored selling your agency, you know how exciting it is to receive that first Letter of Intent (LOI).
It feels like validation \u2014 someone\u2019s putting numbers on paper and saying,
\u201cWe want to buy your business.\u201d
But here\u2019s the reality: not every LOI is created equal.
Some are genuine and actionable.
Others are just fishing expeditions \u2014 designed to gather intel or test your reaction.The trick is knowing the difference.
1\ufe0f\u20e3 Look for detailed, specific terms.
A strong LOI should clearly outline the key components of the deal:
Purchase price (and how it\u2019s structured)
Payment terms (cash, earnout, equity, etc.)
Timeline for diligence and closing
Expectations for your role post-sale
Any exclusivity or confidentiality clauses
If it\u2019s vague, missing numbers, or full of \u201cTBDs,\u201d that\u2019s a red flag.
Vague LOIs lead to messy negotiations \u2014 or worse, wasted months.
2\ufe0f\u20e3 Check who\u2019s signing it \u2014 and what they\u2019ve done before.
A serious LOI comes from someone with both the authority and the track record to close. If it\u2019s a first-time buyer, individual, or fund with no history of closed deals, proceed with caution. Ask for references from previous sellers.
Good buyers will happily connect you with founders who\u2019ve been through it.
3\ufe0f\u20e3 Assess their timing and process.
Serious buyers move efficiently and transparently. They outline next steps clearly: \u201cHere\u2019s our diligence process, our team, and our target closing date.\u201d
Non-serious buyers often drag things out, make excuses, or \u201cgo dark\u201d after the LOI is signed. Momentum matters \u2014 and experienced buyers know how to maintain it.
4\ufe0f\u20e3 Beware of \u201chigh-number traps.\u201d
Some buyers float inflated LOI prices just to get exclusivity and push competitors away. Once you\u2019re locked in, they \u201cretrade\u201d (reduce the price) during diligence based on \u201cnew findings.\u201d A too-good-to-be-true number often is. A fair, well-supported offer from a reputable buyer is far better than a flashy number from a flaky one.
5\ufe0f\u20e3 Look for signs of real investment.
Serious buyers put skin in the game \u2014 sometimes through earnest deposits, dedicated diligence teams, or clear legal counsel engagement. If someone\u2019s not willing to spend time or money before exclusivity, they\u2019re probably not going to after. A well-written LOI isn\u2019t just a formality \u2014 it\u2019s a signal of how the buyer operates. If they\u2019re organized, transparent, and professional now, they\u2019ll likely be the same through closing. If they\u2019re sloppy or evasive, expect turbulence ahead.
In M&A, time is your most valuable resource. Don\u2019t waste it on tire kickers.<\/p>\n\n\n\n