Unpopular opinion about LOI

April 07, 2026

by a professional from University of Cambridge in San Diego, CA, USA

Unpopular opinion: Most LOIs are signed before anyone actually understands the business. Buyers fall in love with a deck, agree to a valuation, then send in the QoE team to "confirm." That's backwards. Quality of Earnings isn't a confirmatory exercise. It's a discovery process. The number of times I've seen QoE findings reshape - or kill - a deal that had been "agreed in principle" is more than I can count. PE firms that treat QoE as a post-LOI formality are leaving serious money on the table. The firms that use QoE to inform the LOI? Those are the ones winning in this market. Agree or disagree? Let's talk. #HotTake #MandA #Valuation

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Reply by a searcher
from Harvard University in San Juan, Puerto Rico

Feels like an AI troll post, but I'll bite. No way doing a QoE before LOI is a good idea. First of all, you won't even get the data to do your QoE, much less the time. If a buyer insists on QoE pre-LOI, they'll simply get outrun by somebody who's willing to sign an LOI without it. Yeah it may lead to more retrading than if QoE were done pre, but that's the reality of the market, and buyers have to compete in that market.

Reply by a searcher
from Howard Payne University in Austin, TX, USA

@Jaime Arias‌ You're right that the market punishes buyers who try to gate an LOI on a full QoE. That's just reality. But I'd challenge the implied binary. The choice isn't "full QoE pre-LOI" vs. "sign and hope." There's real work you can do before an LOI that doesn't require seller cooperation, doesn't take weeks, and isn't costly, and it changes the quality of the conversation you have at the LOI table. I've walked away from multiple deals because pre-LOI work told me everything I needed to know. Owner comp that didn't hold up under normalization. Working capital patterns that flagged a cash flow story the CIM wasn't telling. Valuation that only made sense if you squinted hard enough. None of that required a data room. None of it was a QoE. It was just... not flying blind. Deals that blow up post-LOI are almost never surprises in retrospect. The information was available; the buyer just hadn't looked.

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