Know What You’re Agreeing to Before You Sign
Review the cash at closing, binding clauses and buyer deadlines before agreeing to exclusivity. Sailfish helps you compare the offer and prepare for the conversation with your attorney.
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Related Reading on Business Valuation and Sale Preparation
Read the Binding Clauses Before You Sign
A letter of intent for selling a business in Florida can bind you to confidentiality, exclusivity and other terms as soon as you sign. The proposed price commonly remains subject to diligence and a definitive agreement. Ask your attorney to identify exactly which provisions take effect, when they expire and which ones survive termination.
Sailfish Equity Advisors represents Florida business owners on the sell side. At the LOI stage, we help you compare the economics, assess the buyer’s ability to close and make a plan for the period when the buyer wants exclusive access. Your attorney reviews enforceability and prepares legal language. Your tax and accounting advisers help you evaluate the proceeds and assumptions behind the offer.
Sort the Offer Into Three Decisions
Start by marking the date when the buyer expects your signature. Then read the entire document, including any attachments and the confidentiality agreement you signed earlier. Ask your attorney to mark which terms take effect now, which carry forward if talks stop, and which still need a signed purchase agreement. Compare the marked copy with the obligations your team can realistically meet.
What you commit to now. Identify any no-shop provision, confidentiality obligations, expense allocation, deposit instructions and provisions about disputes. The binding clause may refer to section numbers. Make sure those numbers point to the sections the parties actually discussed.
What you agree to pursue. Identify the proposed price, purchase structure, included assets, payment terms and target closing date. Check the assumptions underneath each. A buyer may condition an offer on receiving inventory, keeping a key manager or getting a lease assignment.
What would survive if talks end. Confirm when exclusivity expires, what happens to copies of your records and how any outstanding deposit or expenses are resolved. Check whether the parties agreed to a specific notice method. Give someone on your team responsibility for tracking it.
The title of the document gives you little guidance about individual clauses. For a public illustration, SIM Acquisition Corp. I and American Industrial Technologies announced an LOI in April 2026 with an initial 45-day exclusivity period. In October, the parties executed a replacement they described in an SEC filing as a binding LOI. The replacement still made closing subject to conditions, including definitive documents and approvals. The example shows how commitments can change as a negotiation progresses. April LOI announcement and October SEC filing.
Make the Exclusivity Period Earn Its Place
Exclusivity gives the buyer time to spend money and staff hours investigating the business. It also limits your options during that period. If another buyer approaches you while the first is arranging financing, your ability to respond can depend on the exact wording. Review restrictions on soliciting offers, responding to unsolicited inquiries and keeping existing discussions open. Ask how an inbound approach is supposed to be handled and whether notice is required.
A calendar date alone tells you when the clock runs out. Milestones tell you whether the buyer is using that time. For example, a seller considering a hypothetical 45-day period could ask for lender submission by day 10, a written summary of any material diligence findings by day 30 and a first draft purchase agreement by day 35. If the offer is cash funded, substitute meaningful checks on proof of funds, investment committee approval or a signed equity commitment. Dates should reflect the specific transaction and each side’s ability to deliver.
Discuss what a missed milestone triggers. A written status update may be enough for a short administrative delay. A deadline with a right to end exclusivity can be useful when a financing application or material deliverable remains outstanding. Align the LOI with your own document delivery deadlines, and agree how buyer delays and seller delays are treated. A buyer may reasonably ask for an extension when it has met its obligations and an independent approval is pending. Decide whether an extension needs fresh written consent and what evidence would justify it.
Translate the Headline Price Into Money You Can Use
Before putting other offers aside, build a simple proceeds bridge with your advisers. Separate cash due at closing, debt to be paid from proceeds, escrow or holdbacks, seller financing, earnout payments, and any equity you are expected to retain. Specify who owns cash and receivables at closing and how inventory and working capital affect the amount you receive. Find out whether the buyer’s target requires you to leave extra cash in the business or adjust the price after closing.
Consider two illustrative offers. Offer A lists a price of $2.4 million with $1.8 million at closing, a $300,000 seller note and up to $300,000 tied to performance. Offer B offers $2.15 million in cash at closing. Before taxes, fees and other adjustments, B puts $350,000 more in your hands at closing. A can eventually pay more, but that depends on the buyer’s repayment and how the earnout works. The comparison changes again if one offer includes more inventory or requires you to stay on for a longer transition.
Write the terms you consider essential in the LOI before diligence starts. For a seller note, that might include interest, repayment and how the acquisition lender’s requirements affect your position. For an earnout, identify the metric, measurement period and access to records. If the sale includes real estate or requires a separate lease, say which agreements need to close together. Ask your CPA to compare what you could retain after debt, fees and estimated taxes under each structure. Your minimum acceptable cash at closing should reflect what you need to do after the sale.
Agree How a Buyer Can Reopen the Economics
A buyer may find a valid reason to change its proposal. The customer it assumed would renew may have given notice, or equipment may need an unbudgeted replacement. Ask the buyer to identify its starting assumptions while there is still a choice between offers. If proposed earnings include an adjustment for an unusual expense, agree which records will substantiate it. If the buyer expects receivables or inventory to pass, agree how they will be measured.
Consider how the buyer will raise an issue and what detail it should supply. A written proposal that identifies the finding, shows the calculation and ties it to a negotiated assumption is easier to evaluate than a request for a round-number discount. Depending on the deal, a finding may call for a specific escrow, an adjustment, a revised timeline, or an end to negotiations. Have counsel clarify whether you can end exclusivity if a buyer materially changes its offer. The practical value of that option depends on how it is written and when it applies.
Set the Deposit Instructions Before Money Moves
If the LOI calls for a deposit, have counsel specify the holder, due date, proof of receipt, refund and release conditions, and whether the money is credited at closing. Make clear what happens if the buyer withdraws, if financing fails, or if the parties disagree about whether a condition was met. A deposit sitting in escrow can still require formal release instructions.
When a Florida real estate broker receives a deposit covered by Florida’s broker escrow rules, the rules generally require escrow by the end of the third business day after receipt. Saturdays, Sundays and legal holidays do not count under that definition. If conflicting demands arise over funds in the broker’s account, Florida’s statute and rules prescribe notification and settlement procedures. Ask your attorney to confirm which rules apply to your transaction and escrow holder. Florida’s broker escrow definitions, Florida’s broker notice requirements and Florida Statutes section 475.25.
Assign the Work Between Signature and Funding
The period after signing depends on the buyer’s financing, the state of your records and who else must approve the transaction. List those dependencies before setting a close date. A landlord might require an application and financial statements from the buyer. A lender may need updated results or an appraisal. Put a name and a date beside each request, including who follows up when an item is late. Compare the proposed schedule with the stages of a Florida business sale.
Agree on how the buyer can approach employees, customers and vendors. Keep a written record of who can see each set of documents, and share especially sensitive information only when the agreed diligence stage requires it. If the buyer asks to call a key customer, decide with your advisers whether the timing, script and participants make sense. A missed deadline can be moved. An employee who learns about a sale prematurely still has to decide what it means for their job.
Bring a Short List to Your LOI Review
Bring the current letter, the signed confidentiality agreement, your cash requirements and a list of the approvals you expect to need. Identify the terms that would make you decline the offer or ask to keep marketing. Sailfish can help compare competing proposals, discuss how to qualify the buyer, organize diligence and flag points for your attorney and CPA. Owners preparing earlier can use our Florida business sale planning guide to see how the LOI fits into the process.
If you have a letter of intent in hand, schedule a confidential conversation about your offer before agreeing to take the business off the market.
Questions Sellers Ask Before Accepting an LOI
Is a letter of intent legally binding when selling a business in Florida?
It depends on the document and the circumstances. An LOI may make confidentiality, exclusivity or expense provisions binding while leaving the proposed price and closing subject to a definitive agreement. Have your attorney identify the sections that take effect when signed and whether any obligations continue if the deal ends.
Can I keep talking to buyers after I sign a no-shop provision?
Your choices depend on the provision. Some restrict soliciting new offers, responding to incoming inquiries or continuing negotiations already in progress. Ask counsel to clarify how to handle an unsolicited approach, whether an exception applies, and when you can resume talks if the buyer falls behind or changes the offer.
What happens to the deposit if the buyer walks away?
The signed terms and applicable escrow rules control how the deposit can be released. Review whether a financing or diligence contingency applies, whether either party needs to give notice and whether the holder requires joint instructions or other authority. Counsel can address any dispute before either side assumes the funds are available.
How long does it take to close after signing a business sale LOI?
The schedule depends on the scope of diligence, buyer financing, purchase documents and outside approvals. Ask the buyer to identify the work required for each milestone, including its lender’s review and any landlord consent. Revisit the closing forecast when you learn which requirements can run at the same time.
How does Sailfish Equity Advisors help sellers evaluate an LOI?
We help you compare the cash and deferred components, review the buyer’s funding plan and set milestones for diligence and closing. We work with your attorney and accountant so the commercial terms, legal language and cash requirements are considered together before you decide whether the offer meets your goals.