Fee for LOI?

by a searcher from The University of Michigan - Stephen M. Ross School of Business

3 years ago

Good News: Exploring a company that checks all the boxes... Solid revenue/cash flows/EBITDA.

Bad News: The owner of the non-broker listed company wants a $50k fee to put the company into an exclusive Letter of Intent. They also would like to have the LOI time period be a short 14-days! If the company does not "check out" during LOI they keep the $50k.

Anyone have similar experiences and if so, how did you overcome?

Thanks in advance!

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12 comments

investor from Texas A&M University

This is a HARD PASS-

3 years ago | like reply | 0 likes

intermediary from Wisconsin Lutheran College

Sounds like this seller needs an intermediary to educate them on process. Likely has been burned in the past negotiating directly with buyers because they don't want to pay a fee. Now they go overboard trying to "qualify" buyers. If you can't educate him, look for another deal. I would bet his legal will be on the cheap end and cause problems once you get to docs anyway.

3 years ago | like reply | 0 likes

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