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Letter of Intent

Definition

A Letter of Intent (LOI) is a non-binding document in which a buyer outlines the key terms of a proposed acquisition — including purchase price, deal structure, financing, and timeline. Signing an LOI typically grants the buyer an exclusivity period to conduct due diligence before negotiating the definitive purchase agreement.

Context

The LOI stage is implied in Ep. 23 discussions of M&A process dynamics. It sits between the management presentation stage and full due diligence. A buyer's willingness to submit a strong LOI — and then honor those terms without re-trading — is a key factor in how boutique bankers evaluate reliability.

In Ep. 4, Rod Jimenez describes one of the fastest LOI timelines on the podcast: after eighteen months of relationship building with Serent Capital, "within a few days we had an LOI." Rod attributes this speed entirely to the depth of the pre-existing relationship — the diligence on character and fit had already been done over the preceding year and a half.

In Ep. 6, Dan Herr positions the LOI as both a pipeline stage ("LOI submitted, LOI signed") and an output metric. He argues firms should ask, "did we put enough LOIs out there in order to get that one good deal?" and segment LOIs submitted by proprietary vs. banked source to evaluate sourcing channel effectiveness. (Ep. 6)