The buyer wrote the letter of intent. Let me read it before you sign.
Most of the letter is non-binding. That is true of everything the buyer offered and untrue of the one thing you are giving: exclusivity. For the next sixty or ninety days one side can walk away and the other cannot. Send it to me first. No fee, no obligation, confidential either way.
Attach the letter as a PDF. Tell me the company, the buyer, and your deadline.
Where are you with the letter?
You have more room than you will ever have again.
Everything the letter leaves vague gets settled later by the buyer’s lawyers, while you are bound by exclusivity. Two or three specific points raised now, on structure, cash at closing or the length of the no-shop, land in the purchase agreement as settled terms. The same points raised in week six are concessions you ask for.
Send the letter before you sign. The summary gives you the points and the words for the buyer.
Send it anyway. The first job is knowing what you agreed to.
The binding clauses are in force, and the one that matters is exclusivity: how many days, what ends it early, and what the buyer has to deliver to keep it. The commercial terms are still negotiable at the purchase agreement, inside the frame the letter set. Knowing where that frame is weak is the point of reading it now, and the phases that follow move quickly.
Then the letter is yours to write, and it should hold.
A buyer’s letter needs a no-shop that actually binds, a structure the seller cannot quietly reopen, and conditions that let you walk without a fight. That is drafting work, and a different conversation from a free read. It starts on the M&A page, or with a call.
What you are agreeing to the day you sign
The number on page one is an opening position.
Diligence is where it gets tested, and the working capital adjustment is where it gets trimmed after closing. What the letter can do is fix how much of it is cash at closing. See the next section.
The most consequential clause in the letter, and the one written to bind.
Thirty to ninety days in which you may not solicit, negotiate with or open diligence to anyone else. Texas courts enforce it like any contract. The length matters less than what ends it early and what the buyer must deliver to keep it.
Confidentiality binds, and it should cut both ways.
Check that the buyer is bound as tightly as you are, that your employees and customers are covered, and that the obligation survives if the deal dies.
Non-binding on paper. Treated as settled in practice.
Whether you are selling assets or equity decides which liabilities you keep, the tax result and how many consents you need. Buyers propose what suits them and rarely expect a seller to reopen it later. Raise it now or live with it.
Each side pays its own, unless the letter says otherwise.
Watch for break fees and for language that shifts the buyer’s diligence costs to you if you walk.
Governing law and forum bind, and they travel into the purchase agreement.
A Delaware or Alberta choice in the letter is hard to move later. For a Texas company selling to a Texas buyer, Texas law is the default to insist on.
The buyer’s exits, listed in advance.
Financing, diligence to the buyer’s satisfaction, key-employee agreements, board approval. Each one is a door only the buyer can use. Ask what the mirror on your side is.
Non-binding now. Very hard to shorten later.
Five years and statewide in the letter becomes five years and statewide in the purchase agreement. Texas enforces reasonable restrictions, so the time to make it reasonable is before you sign.
Often not in the letter at all. That is the problem.
Caps, baskets, survival periods and the size of the escrow holdback decide how much of the price you actually keep. A letter that is silent hands the buyer the first draft.
Target dates bind only if the letter makes them conditions of exclusivity.
A draft purchase agreement by day 30, financing confirmed by day 45. Tie the buyer’s exclusivity to those dates and a slow buyer loses it. Leave them as targets and they are decoration.
Texas treats intent to be bound as a question of fact. A “subject to documentation” line does not settle it on its own (Foreca, S.A. v. GRD Development Co., 758 S.W.2d 744 (Tex. 1988)). The letter should say which clauses bind, in so many words.
How much of the price is cash at closing?
Type the headline price. Switch on the pieces the buyer’s letter proposes. Most letters carry at least two of them.
Illustrative. The percentages are typical shapes from private-company letters, and yours will differ. The point is that 45% of a $10,000,000 letter is what the word “price” means on closing day. The letter is where that split is decided.
How long are you locked in, and what does the buyer owe you for it?
Tight, and it favors you. A serious buyer with financing in hand can run diligence and deliver a draft agreement in thirty days. Many will ask for an extension around day twenty-five. Make any extension conditional on a draft purchase agreement already in your hands.
Workable for a prepared seller. If your data room, financials and contracts are in order, forty-five days is enough for diligence and a first draft. The milestone to write in: a draft purchase agreement by day 30, or exclusivity ends.
The common ask, and the fair one, with conditions. Sixty days covers a quality-of-earnings review, legal diligence and a draft agreement. Tie each to a date: financing confirmed by day 20, QoE complete by day 40, a draft by day 45. A buyer who misses them should lose exclusivity, not receive an extension by default.
Long. Ask why. Ninety days usually means the buyer’s financing is not in hand or the buyer is running several processes at once. If you agree to it, it should buy you something: a break fee if they walk for reasons other than diligence findings, hard milestones, and the right to keep preparing other buyers in the background.
Thirty to ninety days is the typical range for a private company sale. The number is negotiable. What the buyer must deliver to keep it is the better negotiation.
Nine things I check in every letter
Every clause written to be enforceable on signing, including the ones the drafter forgot to label.
Length, what ends it early, and what the buyer must deliver to keep it.
How the headline splits into cash, note, rollover, escrow and earnout, and how the working capital peg is set.
Which liabilities you keep, the tax result, and how many consents you will need from customers and landlords.
Whether the formula, the measurement period and your control after closing are written down or left for later.
How long, how far, and what the buyer expects of you after the money moves.
Financing, diligence scope, key-employee agreements, the reasons the buyer can walk and what that costs them.
Employees, the lease, your personal guarantees, indemnity caps, the timeline. A short letter is rarely a simple one.
If the buyer is Canadian, or you are: governing law, currency, tax structure and regulatory review. I am licensed on both sides. Cross-border transactions.
Three steps, one email
- 1
You send the letter.
A PDF to hello@kraus.law with the company, the buyer, any signing deadline and the questions already on your mind. Sending it does not make me your lawyer. The letter and the deal are confidential from the first email regardless.
- 2
I check for conflicts, then read it.
A buyer in your market may already be someone I act for. If so, you hear that first. Otherwise you get a written summary: what binds on signing, what will cost you later if it stands, and the questions to put to the buyer. Give me your deadline. If I cannot meet it, I say so the same day.
- 3
You decide.
Three outcomes are common. The letter is fine and you sign it, then bring in counsel for diligence and the purchase agreement. The letter needs a conversation with the buyer first. Or you want a lawyer at the table now. If that is me, we settle scope and fees in writing before anything starts.
Why there is no fee
Because the alternative is meeting you at the purchase agreement, after the letter has decided the shape of the deal. A short read costs me an hour or two. For a clean letter on a modest deal the summary often says: sign it, and call a lawyer when diligence starts. That advice costs you nothing and it is right more often than you might expect. Where the letter needs work, or the deal is large, the summary says that too, and we talk about what representing you would involve before you decide anything.
Three tours as a public-company general counsel put me on the buyer’s side of a lot of these letters. I know what the drafter is reaching for.
- 25years in corporate practice
- 3tours as public-company general counsel
- TX · MN · ABlicensed in Texas, Minnesota and Alberta
- Legal 500Dallas Elite, Corporate & M&A, 2025
My practice covers M&A for Texas owners, including sales to private equity, strategic acquirers and competitors, with Scale LLP colleagues in tax, employment and real estate joining a deal when it needs them.
Common questions
Partly, by design. Most M&A letters of intent state that the commercial terms (price, structure, closing conditions) are non-binding, while confidentiality, exclusivity, expense allocation and governing law bind on signing. Texas courts enforce the binding provisions like any contract. Whether the parties intended to be bound beyond that is a question of fact, which is why the letter should say plainly which clauses bind and which do not.
Thirty to ninety days is typical for a private company sale. Shorter is better for a seller, and what the buyer must do to keep exclusivity matters as much as the number of days: deliver a draft purchase agreement by a date, confirm financing, keep diligence moving. A period that renews automatically or runs until closing is a sign the letter needs work.
No. Send it anyway. The binding clauses are now in force, so the first job is knowing exactly what you agreed to, especially the exclusivity term. The commercial terms are still negotiable at the purchase agreement, within the frame the letter set. Knowing where that frame is weak is the point of reading it now.
Yes, and serious buyers expect it. A letter of intent is an offer, not a form. Owners who come back with two or three specific points (exclusivity length, cash at closing, structure) are treated as sophisticated sellers, and the purchase agreement that follows reflects it. The letters that cause trouble are the ones signed as received.
No. I represent you only after we both sign an engagement letter that sets out scope and fees. Until then the summary is general information about the terms in front of you, not legal advice on whether to sign, whether the price is fair or whether the buyer is the right one. The letter and the deal are confidential from the first email either way.
Diligence, under exclusivity. The buyer’s advisers examine financials, contracts, employees and liabilities, and the price in the letter becomes an opening position they will try to adjust downward from. Then the purchase agreement, drafted by the buyer’s lawyers, where representations, indemnities, escrows and restrictive covenants are negotiated. The guide to selling a business in Texas walks through each phase.
The purchase agreement decides the money. The letter of intent decides who holds the pen.
The words you’ll hear
These terms turn up in most letters of intent, from the buyer or from me. Each links to a fuller explanation.
- Letter of Intent
- A preliminary written document outlining proposed deal terms, price, structure, exclusivity and timeline, before the definitive agreements are negotiated.
- No-Shop Provision
- The exclusivity clause: for a set period the seller may not solicit, negotiate with or open diligence to other buyers.
- Working Capital Adjustment
- A post-closing true-up of the price against a working capital target set in the agreement.
- Escrow
- Part of the purchase price held by a neutral agent after closing to fund the buyer’s indemnification claims.
- Earnout
- Part of the price paid later, only if the business hits agreed targets after closing.
- Asset Purchase
- A deal structure in which the buyer acquires specific assets and assumes specific liabilities, rather than the entity itself.
- Indemnification
- A party’s contractual duty, usually the seller’s, to cover the other’s losses from breached representations.
- Material Adverse Change
- A closing condition that lets the buyer walk away if the business deteriorates significantly between signing and closing.