The Art of the LOI and When Leverage Disappears

Why the Real Negotiation Starts Before You Sign

The Letter of Intent (LOI) feels like a win.

You’ve got offers on the table. One of them looks good. You’re ready to move forward.

But here’s what most sellers don’t realize:

The second you sign exclusivity, your leverage drops.. fast.

That’s why the real negotiation happens before the LOI is signed, not after.

It’s a formal, non-binding proposal from a buyer that outlines:

Once signed, it locks you into working with one buyer, no more taking other calls, entertaining other offers, or comparing bids.

Before the LOI:

✅ You have competition

✅ Buyers fear missing out

✅ You can walk away freely

✅ You’re fielding multiple bids

After the LOI:

🚫 You’re off the market

🚫 Buyer knows they’re the only game in town

🚫 Timeline slows

🚫 Surprise “adjustments” can show up

That’s why top sellers and their advisors negotiate hard before exclusivity begins.

✅ Final price – Not a range. Not “TBD.” Get it in writing.

✅ Deal structure – Cash at close? Earnout? Seller note? Get specific.

✅ Escrow terms – How much is held back, for how long, and why.

✅ Working capital targets – One of the most commonly missed (and costly) terms.

✅ Reps & warranties insurance – Who pays? What’s covered?

✅ Exclusivity period – 30 to 60 days max, with a shot clock.

Once you’re exclusive, the buyer has less incentive to be generous and more leverage to chip away at terms.

So if something matters to you (price, payout timing, working capital, post-close role), get it in before you sign.

Think of the LOI as the last chance to negotiate from strength.

Play it right, and you enter diligence with:

Play it wrong, and you’ll spend the next 60 days trying to claw back what you just gave away.

Before you say yes, say everything.

or to participate.