Does anyone have tips on sending LOI's?

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February 14, 2023

by a searcher in Utah, USA

Does anyone have tips on sending LOI's? I'm finding deals that I'm interested in and feel like this is the next step but don't have any experience. Is it better to make the offer verbally first? Or send an unofficial LOI before actual one?

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commentor profile
Reply by a searcher
in New Jersey, USA
My preference is always to talk the seller through the offer. IOI is better than LOI, but depends on your stage of due diligence. Sometimes the broker will prefer you send them the offer so they can present it to the seller. You can plead your case to talk through it directly, but if they're adamant it's not the end of the world. As you build more of a relationship with the broker and seller, the interactions will become more meaningful and trusting. You'll need that when inevitably the really hard issues emerge.
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Reply by a searcher
from IE Business School in Milan, Metropolitan City of Milan, Italy
Usually we make the offer verbally, explaining all the key elements (valuation, earn-out, reinvestment, exclusivity, ...) and then send the LOI just after the meeting. After a couple of days the owner replies and the negotiation phase starts.
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