For many business owners, few things are as exciting as receiving a Letter of Intent (“LOI”) from a prospective purchaser. Beyond the sense of validation stemming from the fact that a sophisticated counterparty sees an asset worth paying for, many business owners likely view an LOI as a just reward for decades of hard work, sacrifice, and illiquidity. 

Understandable as these reactions may be, I would argue that they are premature at best, and misleading (or even incorrect) at worst. 

This audio blog attempts to speak to prospective sellers of small or medium-sized businesses about what LOIs are (and more importantly, what they are not), and to review how experienced buyers may strategically utilize them as tools to further their own objectives, sometimes at the expense of those of the seller.