Earnest money deposit letter of intent

Both terms are used to describe an offer made to purchase a business. An over-simplification of the definition of both documents is: An Offer to Purchase is usually written in contract form and defines the price, terms and conditions of the sale, and is usually accompanied by an earnest money deposit.

Both agreements are legal and binding documents and are subject to clauses and conditions of the document, when signed by both the buyer and seller.

An offer to purchase is more common in small transactions and the letter of intent is more common in large transactions. The seller is more receptive to the Offer to Purchase and the buyer is showing their commitment to the sale.

When the buyer presents a Letter of Intent LOI instead of an Offer to Purchase, you do not have as strong of an offer and the percent of such offers that actually close will reduce. It is also difficult to get buyers to make an earnest money deposit on a Letter of Intent. The major problem is these agreements usually require that the seller cannot look at any other offers for a period of days while the buyer is reviewing the records of the business.

Many Letters of Intent will have a financing contingency. When the owner is offering substantial seller financing, there should be minimal contingencies for financing. Beware of an individual or group of people who call themselves Investment Bankers or a Buying Group. The seller should have a copy of the financial statement from the buyer attached to all offers.

Letter of Intent

Finally, there is no such thing as an oral offer! An oral offer is really just a test by the buyer to see what the seller will or will not accept. Make the buyer put the terms of the offer in writing as an intermediate step toward securing a legitimate offer.

Mitch Biggs, the Vice President of Brokers for Bluestone Group, is a graduate of the United States Air Force Academy and an accomplished F fighter pilot. He has over 20 years experience working with and for both public and private companies. His core beliefs of integrity, commitment, community service, personal ownership of three businesses as well as over 10 years with a Fortune company have been instrumental in his ability to lead the brokerage team and deliver exceptional results.

Okay guys, we know the drill — offering more payment options can attract new customers.

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Top 50 - Forbes Top As seen on: The New York Times - SmallBizTrends. Home Legal Offer to Purchase or Letter of Intent. March 6, Mitch Biggs. Offer to Purchase or Letter of Intent Offer or LOI?

Tags business broker buy business sell business. Category Legal Negotiation Tips. Mitch Biggs 20 posts Mitch Biggs, the Vice President of Brokers for Bluestone Group, is a graduate of the United States Air Force Academy and an accomplished F fighter pilot.

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Offer to Purchase or Letter of Intent

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