Deal stages · Before you sell
What should a seller ask before signing an LOI?
Published · Reviewed by The Diligence Standard Team · Updated
The LOI should make the central economics understandable even when many provisions remain nonbinding. Ask what supports the price, what can change it, how the buyer will finance closing and which terms remain open.
A realistic transaction story
A clinic owner accepted a strong headline offer and granted ninety days of exclusivity. The buyer had not secured lender approval and the LOI left working capital undefined. Weeks later, both issues became conditions for a lower cash payment.
What the evidence changed
The seller had agreed to stop marketing before understanding two assumptions that controlled certainty and proceeds.
What to check
- Write down the exact claim and who supplied it.
- Ask what was independently tested, by whom and under what scope.
- Document the economic assumptions, financing milestones, diligence timetable, exclusivity limits and unresolved definitions.
- Translate any unresolved gap into cash, price, terms, timing or a decision not to proceed.