Understanding the Importance of a Letter of Intent in Florida Business Transactions

wheelerlegal
Aug 6
3 min read

Updated: Oct 6

A Letter of Intent is a preliminary document that outlines the major terms of a proposed business acquisition. It serves as a signal of serious interest from the buyer and sets the framework for negotiation. While LOIs are typically non-binding, certain provisions—like confidentiality and exclusivity—can be legally binding, so it’s important to draft carefully and intentionally.

Why Is an LOI Important in a Florida Business Sale?

Although not legally required, an LOI provides many benefits in Florida business purchases:

Clarifies material deal terms up front
Minimizes misunderstandings
Facilitates the due diligence process
May prompt the seller to temporarily take the business off the market
Allows legal counsel to begin preparing the definitive purchase agreement

In a competitive market like Florida, an LOI demonstrates good faith and professionalism—and can help your offer stand out.

Key Components of a Letter of Intent

Here are 10 key components to include in an effective LOI for a Florida business purchase:

1. Structure of the Deal

Clarify whether this will be an asset purchase or stock/membership interest purchase, as the structure affects taxes, liabilities, and approvals.

2. Purchase Price & Payment Terms

Include:

Total price
Earnest money (if any)
Payment method (cash, seller financing, installment schedule, etc.)

3. Description of Assets or Equity

Asset Sale: List assets included (e.g., equipment, contracts, goodwill, customer lists)
Equity Sale: Identify percentage and class of shares/membership interest

4. Transaction Timeline

Outline key dates:

Target closing date
Deadlines for due diligence
Timing for financing or other contingencies

5. Confidentiality Clause (Binding)

This protects sensitive business information shared during negotiations and due diligence.

6. Exclusivity / No-Shop Clause (Binding)

This prevents the seller from soliciting or negotiating with other potential buyers for a set period.

7. Due Diligence Access

Grant the buyer access to business records, including:

Financials
Tax returns
Contracts and leases
Corporate documents

8. Conditions to Closing

List any contingencies required before closing, such as:

Satisfactory due diligence
Financing approval
Landlord or franchisor consents
Transfer of licenses

9. Binding vs. Non-Binding Provisions

Clearly label which provisions are binding (e.g., confidentiality, exclusivity, governing law) and which are non-binding (e.g., price, deal structure).

10. Governing Law

Specify that Florida law governs the LOI. This is important for dispute resolution and interpretation of terms.

Common LOI Mistakes to Avoid

When drafting an LOI, be mindful of these common pitfalls:

Using vague or generic language
Not distinguishing binding from non-binding sections
Failing to involve legal counsel early
Making commitments before completing due diligence

LOIs Set the Tone for the Entire Deal

A thoughtfully drafted LOI is more than a formality—it sets the tone for the entire transaction and can prevent costly disputes down the road. It should be treated as a legal document with real consequences, especially when binding provisions are included.

Protect Your Interests from the Start

Before sending or signing an LOI, consult with a Florida business attorney to:

Confirm the terms reflect your goals
Identify potential risks
Avoid unintentionally binding obligations

Thinking about buying a business in Florida? Let Wheeler Legal PLLC guide you through the process—from LOI to closing. 📞 Contact us today to schedule a consultation and ensure your next move is a smart one.

Disclaimer

This blog post is for informational purposes only and does not constitute legal advice or create an attorney-client relationship. You should consult with a licensed Florida attorney before making any legal decisions related to business purchases or letters of intent.