LOI Strategy: What Most Searchers Get Wrong

Hosted a live session today on LOI strategy and a few things came up worth sharing with the community. The LOI is mostly non-binding, but that's exactly the point. The principal objective is exclusivity. Your job is to get a meeting of the minds on price and structure quickly enough that the seller removes the business from the market and deals exclusively with you. Everything else flows from that. A few practical takeaways: - On structure: Price gets attention, but structure is the art of the deal. Seller note size, forgiveness mechanisms, working capital pegs, and rent normalization all have a real impact on economics. Leading with an aggressive seller note in a competitive process is a good way to get filtered out before anyone reads the rest of your offer. - On working capital: If you don't have enough information to set a specific target pre-LOI, at a minimum, be clear on the approach. A working capital peg and two-way true-up protects both sides and removes the seller's incentive to drain receivables before close. - On incomplete information: Submitting an LOI with imperfect P&L data is more the norm than the exception. Make your assumptions clear to the broker, put them on notice that missing information could affect valuation, and submit your best offer with what you have. Play the game on the field.