Hello All,

I recently sent an LOI draft to a broker for a business I'm interested in. The response contained some things that, to me, feel like they introduce too much risk (as my busted deal costs would accrue with little protection) or are impractical but I wanted to make sure I'm not being oversensitive or out of touch with what's "market" currently. I know that ultimately it's my decision and up to my risk tolerances, but I am thinking about this more in the sense of whether I need to recalibrate my expectations. This is a small deal, incidentally (a little less than $1mm).

1) The response strips the exclusivity component I'd proposed, instead allowing the seller to accept "backup" offers until escrow closes (presumably at that point the deal is done). However, the seller can break off talks between us for any reason before the purchase agreement is signed.

2) No access to records, documents, or other due diligence items until after the purchase agreement is signed and a deposit is put into escrow (though I can get the deposit back if the results of the due diligence are not satisfactory). This basically puts my legal costs ahead of due diligence, in my view, and I thought that's not what is usually done.

3) Certain unspecified assets will not be part of the acquisition, and the list of what is and isn't included won't be made available until after the LOI is signed (and the LOI obviously has a purchase price on it). My original language basically said I'd be acquiring all the company's assets, so I'm not sure whether this exclusion concept introduces risk (for example, if they don't like the price, they could leave out some assets and I wouldn't be the wiser, while my original language said I'm acquiring all the assets that are part of/used by the business).

4) No mechanism to adjust the seller note (~10% of the purchase price) later in the event of misrepresentation or breaches by the seller (and no other mechanism either).

5) Only 30 days for due diligence/financing/etc.

Any thoughts appreciated.