Business Purchase Letter of Intent Template

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Updated June 29, 2022

A business purchase letter of intent outlines a proposed purchase arrangement between a buyer and seller. At the decision of the buyer and seller, the letter may be considered binding, although, usually the letter sets up the framework of a formal agreement that will be drafted at a later time.

Business Purchase Agreement (BPA) – To create a binding agreement for the purchase and sale of a business.

What is a Business Purchase LOI?

A business purchase letter of intent is a document that allows a buyer and seller of an entity to come to an agreement over its purchase. The document should allow the buyer an inspection period in order to prove its revenue and any other due diligence as part of the buyer’s overview during any contingency period.

If the letter is binding, the sale is required to be completed by the end date or the buyer could lose their earnest money deposit.


Business Purchase Letter of Intent – Sample



Effective Date: May 1, 2018

RE: Purchase of a Business Entity 

This business purchase letter of intent (the “Letter of Intent”) represents basic terms agreed upon by the Buyer and Seller. After this Letter of Intent has been made a formal agreement may be constructed to the benefit of the Parties involved.

I. The Buyer: John Appleseed (the “Buyer”)

II. The Seller: Bob Peterman (the “Seller”).

III. The Business: ABC Warehouse LLC (the “Business”).

IV. Purchase Price: The Buyer will enter into an agreement with the Seller for four hundred thousand dollars ($400,000.00) for 100% ownership interest in the Business.

V. Real Estate: This Letter of Intent includes real estate located at 135 Main Street, San Francisco, California 94105.

Legal Description: Block 3717 Lot: 012

Purchase Price: Two-Million Dollars ($2,000,000)

VI. Payment: The Purchase Price for the real estate and the Business will be paid with at the closing.

VII. Financing: The Buyer has made it known that this Letter of Intent is not conditional on their ability to obtain financing.

VIII. Binding Effect: This Letter of intent that shall be considered binding. Therefore, the parties acknowledge that remedies at law will be inadequate for any breach of this Agreement and consequently agree that this Agreement shall be enforceable by specific performance. The remedy of specific performance shall be cumulative of all of the rights at law or in equity of the parties under this Agreement. 

IX. Bank Accounts: In order to keep necessary bank accounts in operation, the Seller agrees to leave Twenty Five Thousand Dollars ($25,000.00) collectively across their financial accounts.

X. Formal Agreement: There shall be no formal agreement (the “Formal Agreement”) created as this Letter of Intent is binding.

XI. Seller’s Conduct: The Seller agrees that during the purchase process to hold a fiduciary duty in the best interests of the Business. The Seller shall in no way conduct any action that would disrupt the on-going status of the Business’s day-to-day operations. This obligation shall continue until the closing date.

XII. Closing: The closing (the “Closing”) is the act of closing the transaction where the Seller exchanges the Business for the Purchase Price. The Closing shall be agreed upon between the Buyer and Seller following a formal agreement, later to be signed, or after the terms are met in this Letter of Intent.

XIII. Closing Costs: All costs associated with the Closing shall be the responsibility of the Buyer.

XIV. Termination: This Letter of Intent will terminate if there has not been a formal agreement signed or a closing within 180 days from the Effective Date.

XV. Access to Information: After the execution of this Letter of Intent the Buyer, and its advisors, shall have full access to any and all information about the Business. The Buyer shall maintain a fiduciary duty to keep the information that it obtains confidential and agrees to not share with any third (3rd) party unless the Seller gives their written consent.

XVI. Return of Materials: Any information that is obtained by the Buyer through the Seller shall be returned if a Formal Agreement or Closing cannot be completed.

XVII. Conditions: It shall be the obligation of the Buyer to review all materials provided and, subject to the satisfaction of the Buyer, enter into a formal agreement within the specified time-period as outlined in Section XI.

The conditions of this Letter of Intent include:

The review and approval of all materials in the possession and control of the Seller;

The Buyer and its advisors having had a reasonable opportunity to perform any searches and due diligence to their satisfaction; and

The Buyer being able to communicate with necessary clients, employees, customers, vendors, tenants, or other third (3rd) party necessary.

XVIII. Confidentiality: All negotiations regarding the Business between the Buyer and Seller shall be confidential and not to be disclosed with anyone other than respective advisors and internal staff of the parties and necessary third (3rd) parties. No press or other public releases will be issued to the general public concerning the Business without the mutual consent or as required by law, and then only upon prior written notice to the other party unless otherwise not allowed.

XIX. Good Faith Negotiations: The Buyer and the Seller agree to act honestly and diligently to enter into “good faith” negotiations to execute a formal agreement and/or enter into a Closing.

XX. Exclusive Opportunity: Following the execution of this Letter of Intent, the parties agree to not negotiate or enter into discussions with any other party unless there are any existing agreements in place (e.g. option to purchase, first right of refusal, etc.).

XXI. Standstill Agreement: Following the execution of this Letter of Intent, and until the Closing, the Seller, agrees not to sell any portion of the Business.

XXII. Currency: All mentions of money or the usage of the “$” icon shall be known as referring to the US Dollar.

XXIII. Governing Law: This Letter of Intent shall be governed under the laws by the State of California.

XXIV. Severability: In case any provision or wording in this Letter of Intent shall be held invalid, illegal or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

XXV. Counterparts and Electronic Means: This Letter of Intent may be executed in several counterparts, each of which will be deemed to be an original and all of which will together constitute one and the same instrument. Delivery to us of an executed copy of this Letter of Intent by electronic facsimile transmission or other means of electronic communication capable of producing a printed copy will be deemed to be execution and delivery to us of this Letter of Intent as of the date of successful transmission to us.



Seller’s Signature ______________________ Date ______________________

Print Name ______________________




Buyer’s Signature ______________________ Date ______________________

Print Name ______________________

How to Write a Business Purchase Letter of Intent

Download in Adobe PDF, Microsoft Word (.docx), Open Document Text (.odt)

1 – Determine The Format You Wish To Work With Then Download This Template

You may download this template as a PDF or word processing file then use the software on your machine to enter and edit information. If the software environment of your machine does not allow you to edit either of these formats, you open the PDF version with your browser then print it.

2 – Fill Out The Header Information

The header will be composed of three parts: one area to supply the sender’s name and mailing address, an area to report the date, and an area to fill in the recipient’s mailing address. Generally, the sender and recipient can be the Buyer, Seller, or Preparer of this document. The first area, composed of three blank lines on the left just under the title, is reserved for the sender’s name and mailing address. The date when this document goes into effect should be entered onto the blank line labeled “Effective Date.” The three empty lines just under the date you supplied are included so you may present the name and address of the intended recipient of this letter.

3 – Report The Information Relevant To The Upcoming Purchase Agreement

Locate the blank line labeled “I. Buyer” then document the full name of the Buyer listed in the Purchase Agreement. Next, find the name of the Seller in the concerned Purchase Agreement, then transcribe it to the blank line after the words “II. The Seller.” If a Business Entity is involved in the Purchase Agreement, then present its full legal name in “III. The Seller.” Now, write out the dollar amount the Buyer must pay the Seller on the first blank line in “IV. Purchase Price” and produce it numerically on the next available line (after the “$” sign). You must also record the percentage of the Business the Buyer will control once he or she has paid the reported dollar amount to the Seller on the blank space just before the percent symbol. Next, in “V. Real Estate,” we must disclose if this Letter Of Intent will or will not concern a purchase that includes property or real estate. If so, then locate the first checkbox in this article, labeled “Includes,” and fill it in. If not, then select the second checkbox in this statement. If the Buyer will be paying for real property, then we must establish a few facts. Locate the item labeled “A. Description,” then use the blank line provided to document the physical address of the concerned property. Continue by consulting the books and transcribing any “Legal Description” of the property on the blank line in item “B.” Finally, you will need to report the “Purchase Price” in item c. Make sure when reporting how much is being paid for the real property, that you first write out the amount then enter it numerically. Two lines have been provided in item “C” for this purpose.

4 – The Financial Aspects Of The Future Purchase Should Be Addressed

The following article, “VI. Payment,” requires an account of how the payment to satisfy the upcoming purchase agreement should be received. Mostly, there will be two general avenues a Buyer can take. Each are summarized in the checkbox statements in this article. If the Buyer will be submitting the full payment at the time of closing then, mark the first checkbox. If the Owner will finance the purchase in the upcoming agreement, then mark the “Owner Financing” statement. You will need to report some additional information if this is the case. Record the “Down Payment” amount (spelled out and numerically) on the two blank lines in item “A,” the Interest on the blank line labeled “Interest Rate” in item “B,” the number of months the Owner will be financing on the blank space between “Term and “Months” in item “C,” and the numerical calendar day of the month when the Owner must receive a payment on the blank line in item “D.” In some cases, the Buyer may not be able to go ahead with a purchase agreement unless the financing is available. We will deal with this issue in “VII. Financing.” First, choose either the first or the second checkbox in this statement. If the Buyer will not proceed to the purchase agreement without financing, then mark the checkbox labeled “Conditional.” If financing is irrelevant to the Buyer entering the purchase agreement, then mark the checkbox labeled “Not Conditional.” Next, use the blank lines in this section to report on the conditions applying to the financing of this purchase. Make sure to be specific when describing such terms. If you have marked “Not Conditional” above, then you may leave these lines blank.  

5 – Outline The Factors Affecting This Letter And The Agreement It Describes

In “VII. Binding Effect,” we will report the status of this letter in relation to the future purchase agreement’s success. If this letter should be considered “Binding,” both parties will need to initial and check the first check box. If not, then both should initial and check the second checkbox. Now, in article “IX. Bank Accounts,” utilize the empty lines to report the dollar amount the Seller has agreed to keep (collectively) in his or her financial accounts. This amount should be spelled out on the first blank space then entered numerically on the second. If there is an official agreement is in place, we will need to indicate as much in “X. Formal Agreement.” You may mark only one of the checkbox statements in this article. Select the first one if the Seller must produce certain materials within a certain amount of days of the formal agreement to the satisfaction of the Buyer (you must enter the number of days on the blank line in this statement). If there is no formal agreement that depends on the Seller’s productions, then mark the second statement. If the Buyer will be financially responsible for the Closing, then mark the first box in “XIII. Closing Costs. If the Seller will handle the finances of Closing, then mark the second checkbox in this article. If both parties will handle their own expenses during the Closing, then mark the third checkbox in this article.  The next article, “XIV. Termination,” requires you report the number of days after the Effective Date where this letter will be nullified without a signed formal purchase agreement or a closing. Article “XVII. Conditions,” will list several conditions that usually apply to a Letter of Intent such as this one. If there are any conditions not included in this list, then report them on the blank line in item D. The state where this agreement will be upheld and governed must be recorded in article “XXIII. Governing Law.”

6 – Both The Buyer And The Seller Must Execute This Letter By Signature

The Seller must sign his or her name, print his or her name, and date his or her signature on the blank lines labeled “Seller’s Signature,” “Print Name,” and “Date” in the Seller signature area at the end of this document. The Buyer should find the “Buyer” signature area at the conclusion of this paperwork then sign his or her name on the “Buyer’s Signature” line, print his or her name on the “Print Name” line, and enter the current date on the line “Date.”