Transaction reality · Before you sell
An accepted LOI does not lock the final economics
Published · Reviewed by The Diligence Standard Team · Updated
An LOI is an important milestone, but many terms remain nonbinding or subject to diligence and definitive agreements.
How it appears in a real transaction
After exclusivity begins, the seller has fewer active alternatives. A buyer may discover legitimate issues or seek better terms. The seller needs a written record connecting every requested change to evidence.
A practical example
The price remains $2 million, but a new working-capital target, escrow and seller note reduce cash at closing by $450,000.
What to do next
- Understand which LOI terms are binding.
- Define key economic assumptions before exclusivity.
- Track every information request and finding.
- Reconcile the final agreement back to the LOI.