Mostly non-binding, and mostly decisive. The terms recorded here are the terms you will be negotiating from for the rest of the transaction.
Start a private conversation with the Acquisition Concierge, already scoped to the letter of intent. Pick a starting point, or describe your situation directly.
A letter of intent is usually described as non-binding, and on the commercial terms it generally is. That description misleads buyers in two ways. First, the provisions that are binding, exclusivity, confidentiality, expenses, and sometimes a break fee, are the ones with immediate teeth, and exclusivity in particular hands the seller a fixed period during which you are committed and they are not talking to anyone else. Second, and more consequentially, the commercial terms recorded in an LOI acquire enormous practical weight. Reopening one later, even where you are legally free to, reads as renegotiation and costs goodwill at exactly the point you need the seller cooperative. Anything you would find difficult to raise for the first time in week six belongs in the LOI.
Some binding, some not, and the practical weight of a term does not track whether it is enforceable.
The headline figure and how it is paid, cash at closing, notes, earnout, rollover, escrow. Non-binding, and very hard to move afterward.
Binding. A defined period in which the seller may not talk to others, and in which your leverage steadily declines as you spend on diligence.
How the peg will be set and settled. Buyers routinely leave this vague and regret it, because the settlement is real money.
Asset or equity, and what is included or excluded. Has tax consequences for both sides that are painful to renegotiate later.
Escrow size, survival periods and caps, at least in outline. Silence here means negotiating the whole framework from scratch later.
What the seller does after closing, for how long, and on what terms. Frequently assumed by both parties and agreed by neither.
How to approach an LOI.
Exclusivity is a clock. Every week of it spends money and shifts leverage toward the party who is not under time pressure.
On day one you can walk cheaply. By week eight you have spent real money and the seller knows it. Anything you would want to renegotiate is best raised before the clock starts, not once it is running.
Detailed enough that no material commercial term is left to be discovered later. Short LOIs feel efficient and consistently cost more, because every unaddressed term becomes a negotiation conducted under exclusivity, when your leverage is at its lowest. Price, structure, working-capital mechanism, indemnity outline, seller transition and conditions to closing all belong in it. The purchase agreement will be far longer, but it should be documenting a deal that is already agreed rather than settling one.
Long enough to complete diligence and put financing in place, commonly sixty to ninety days in a lower-middle-market transaction, longer where financing is complicated or regulatory consents are needed. Watch what happens at expiry: automatic extension provisions can quietly convert a bounded commitment into an open-ended one. Where a seller pushes for a very long period, that is worth understanding, since it may indicate they expect diligence to take longer than they have said.
You can, and it is entirely legitimate where diligence produces a genuine finding, that is what diligence is for. But it is a moment that tests the transaction, so the manner matters: a specific, evidenced adjustment tied to a named finding is received very differently from a general repricing that reads as opportunism. Sellers who feel retraded frequently become difficult on every subsequent term, and occasionally walk. Where a finding is significant, presenting it with the underlying analysis and a proposal for structure as well as price usually preserves more than a bare price cut.
Treat urgency as a finding in itself. Legitimate reasons for speed exist, a competing process, a health situation, a year-end, and they are usually explained readily and verifiably. Pressure to sign quickly without explanation, or resistance to specific diligence workstreams rather than to their duration, is among the more reliable warning signs in private-company transactions. A seller genuinely confident in their business rarely objects to it being examined; they object to it taking six months.
Describe what has been proposed. The Concierge will work through what it commits you to and what is missing from it.