Yes, you should have an attorney review your letter of intent before signing. Although most LOI terms are non-binding, exclusivity, confidentiality, and earnest money conditions are binding from the moment of signature. The LOI also sets the deal structure and price mechanics that the purchase agreement will be built on. Getting these wrong before signing costs leverage that cannot be recovered.
Most buyers treat the LOI as a formality. It is not. The letter of intent is the document that defines your exclusivity period, locks in your earnest money exposure, establishes whether you have a financing exit, and sets the purchase price mechanics that will be negotiated into the final purchase agreement. Signing it without attorney review is the single most common and most expensive mistake first-time business buyers make.
Buyers who contact Acquisition Stars after signing an LOI often face the same set of problems: an exclusivity period that has already burned two weeks while they were looking for counsel, earnest money sitting in an escrow with unfavorable forfeiture conditions, a financing contingency that was never included, or purchase price language that will require them to re-negotiate terms the seller now considers settled. The time to fix these issues is before signing, not after.
This page explains what an attorney reviews in a business acquisition LOI, what the most consequential provisions are, how the LOI review process works at Acquisition Stars, and what buyers under time pressure need to know. For background on what an LOI is and how it fits the deal timeline, see what is a letter of intent. For drafting an LOI from scratch, see letter of intent to buy a business. For buyers using SBA financing, see small business acquisition attorney. If you have not gotten to the LOI yet and are instead looking at the broker's standard offer form, see the business purchase agreement lawyer page for that earlier stage.
Most letters of intent contain three to five binding provisions that directly affect a buyer's negotiating position on the final purchase agreement. The structure set in the LOI is difficult to change once both parties have invested time and money in due diligence. An attorney review before signing is not about the length of the document. It is about the assumptions baked into it.
1 What Does a Letter of Intent Attorney Review?
A business acquisition LOI is typically three to eight pages. Most of those pages contain non-binding terms that will be negotiated in the purchase agreement. But several provisions are binding from the moment of signing, and others that are technically non-binding have enough precedent-setting effect on the deal that getting them wrong at the LOI stage creates problems downstream. Here is what an attorney looks for.
Binding Provisions (Must Be Right Before Signing)
- 1Exclusivity period length and extension mechanics
- 2No-shop clause scope and seller obligations
- 3Confidentiality obligations for both parties
- 4Earnest money deposit and refund conditions
- 5Break-up fees or expense reimbursement provisions
Non-Binding Provisions (Precedent-Setting)
- 1Purchase price and payment structure
- 2Financing and due diligence contingencies
- 3Seller note terms and standby provisions
- 4Non-compete and transition obligations
- 5Asset vs. stock purchase structure
Exclusivity and No-Shop Clauses
The exclusivity clause is the most important binding provision in most LOIs. It prohibits the seller from soliciting or entertaining other offers during the exclusivity period, typically 30 to 90 days. For the buyer, this is valuable protection. But exclusivity that is too long, or that contains automatic renewal language, can become a trap. If the deal falls through at week 75 of a 90-day exclusivity, you have been locked out of other opportunities for months. An attorney reviews the exclusivity period length, extension conditions, and the triggers that allow either party to terminate before the period expires.
No-shop language that is ambiguously drafted can also create disputes. If the seller argues they were only prohibited from soliciting offers but not from receiving them, the no-shop protection you thought you had may be unenforceable. Precise language matters.
Financing Contingency
A financing contingency is a buyer's most important protection in most small business acquisitions. It allows the buyer to exit the deal without losing their earnest money if financing is not obtained on satisfactory terms within the specified period. Broker-drafted LOIs frequently omit the financing contingency entirely, or draft it so narrowly that it only covers a complete lender denial and not a scenario where the lender offers materially worse terms.
For SBA-financed deals, the financing contingency must be drafted specifically for the SBA 7(a) program. It needs to include an adequate timeline for SBA underwriting (typically 45 to 90 days after LOI execution), specify what constitutes a denial, and address what happens if the lender's conditions are unacceptable to the buyer. A generic financing contingency from a broker template will not address these nuances.
Due Diligence Contingency and Diligence Leverage
Most buyers understand that due diligence happens after the LOI. Fewer understand that the LOI should include a due diligence contingency that protects the buyer's right to exit if material problems are discovered. Without this contingency, a buyer who discovers a significant undisclosed liability during due diligence has limited options: accept the risk, try to renegotiate the price on goodwill grounds, or walk away and risk losing their earnest money.
The LOI should also specify the due diligence period with a clear start date, a defined scope of what the seller is obligated to provide, and what happens if the seller does not cooperate. A due diligence period that starts "upon execution of the purchase agreement" rather than "upon execution of this LOI" costs the buyer weeks of time. That sequencing issue is exactly what attorney review is designed to catch.
Purchase Price Mechanics
Purchase price in an LOI is non-binding, but the mechanics matter. An LOI that states a purchase price without specifying what is included (which assets, which liabilities, what inventory adjustment mechanism) creates a negotiation over the meaning of the LOI when the purchase agreement is drafted. An attorney reviewing the LOI ensures the purchase price is defined precisely enough to anchor the purchase agreement negotiation correctly.
Working capital adjustments, accounts receivable treatment, and inventory purchase price components are the most common sources of purchase price ambiguity at the LOI stage. Getting these defined in the LOI, even at a high level, reduces dispute risk in the purchase agreement.
Earnest Money Deposit and Forfeiture Conditions
Earnest money in small business acquisitions typically ranges from 1% to 5% of purchase price. The amount matters less than the forfeiture conditions. An LOI that requires the buyer to forfeit earnest money for any reason other than seller default is extremely one-sided. At a minimum, the buyer should retain the right to a refund if the financing contingency fails, if due diligence reveals a material misrepresentation, or if the seller is unable to deliver clear title to the business assets.
Attorney review ensures the earnest money provisions match the buyer's actual risk profile. A $50,000 earnest money deposit on a $1M deal is substantial. The conditions for keeping that deposit should be reviewed by someone whose job is to protect the buyer, not close the transaction.
What Broker Templates Routinely Miss
Business broker LOI templates are designed to get both parties to sign quickly. They are not designed to protect buyers. Common omissions include: no financing contingency, no due diligence contingency, earnest money that is non-refundable for ambiguous reasons, exclusivity periods with no defined end date, and no mention of SBA seller note requirements for financed deals. An attorney review adds a layer of protection the broker template was never intended to provide.
2 Do I Need an Attorney to Review a Letter of Intent Before Signing?
The LOI is often treated as a preliminary document that will be superseded by the purchase agreement. That framing is misleading. What the LOI establishes carries through to every negotiation that follows.
Precedent Effect on the Purchase Agreement
When purchase agreement negotiations begin, the seller's attorney will use the LOI as the baseline. Provisions not in the LOI are easier for the seller to resist. Provisions that are in the LOI are harder for the seller to walk back without creating a dispute over whether the buyer is acting in good faith. A buyer who accepts broker LOI language that omits the due diligence exit right will find the seller's attorney using that omission as an argument that the buyer never expected one.
Exclusivity Burn Rate
Every day of exclusivity that passes while you are locating counsel, getting up to speed on the deal, or waiting for the seller to produce documents is a day you cannot recover. A 45-day exclusivity period that starts without a defined due diligence scope is a 45-day countdown with no clear stopping point. Buyers who sign first and engage counsel second are always working under more time pressure than buyers who reviewed the LOI before signing.
SBA Timing and the LOI Window
For SBA-financed acquisitions, the LOI window is especially critical. SBA underwriting typically takes 45 to 90 days after the loan application is submitted. The financing contingency must give the buyer enough time to complete SBA underwriting within the exclusivity period. An LOI with a 30-day exclusivity and no financing contingency extension right is structurally incompatible with SBA financing. Many buyers discover this only after signing. For a full treatment of SBA-specific LOI requirements, see letter of intent to buy a business.
The compounding problem: A buyer who signs a weak LOI is not just exposed at the LOI stage. The purchase agreement negotiation, due diligence period, lender conditions, and closing timeline are all downstream of what the LOI established. Fixing leverage problems that were created at the LOI stage requires the seller's cooperation, which may not be forthcoming. The best time to protect leverage is before signing, when you still have it.
3 The LOI Review Process at Acquisition Stars
The following is the standard sequence for an LOI review engagement. The process is designed for buyers who are under time pressure and need attorney feedback before a signing deadline.
Initial Consultation and Deal Overview
Before reviewing the LOI, the attorney needs to understand the deal: the type of business being acquired, the financing structure (SBA, conventional, seller-financed), the approximate purchase price, whether the buyer has received an LOI from the seller's side or is preparing one to send, and the signing timeline. This context determines which provisions to prioritize and what SBA-specific analysis is required. Request a consultation at /consultation to begin.
LOI Document Review and Annotation
The attorney reviews the full LOI with attention to binding provisions first (exclusivity, no-shop, confidentiality, earnest money, break-up fees), then to the non-binding provisions that carry precedent weight (purchase price mechanics, contingencies, deal structure, non-compete and transition terms). The review produces a redlined draft with tracked changes and explanatory comments, or written issue memos for LOIs where the concerns are more structural than drafting-level.
SBA-Specific Analysis (for Financed Deals)
For SBA-financed acquisitions, the attorney confirms that the financing contingency references the correct program and timeline, that seller note terms are addressed if the lender will require a seller carry, that the exclusivity period is long enough for SBA underwriting, and that no LOI provisions are structurally incompatible with SBA requirements. For the full SBA buyer context, see small business acquisition attorney.
Review Debrief and Negotiation Strategy
The attorney walks through the findings with the buyer: which provisions are high-priority to address before signing, which are lower-stakes, and how to approach the seller or broker with proposed changes without creating unnecessary friction. Not every comment needs to become a negotiation battle. The attorney prioritizes the issues that carry real risk and identifies which changes are worth pushing for given the specific deal dynamics.
Counter-LOI Drafting or Markup
If the LOI requires significant changes, the attorney prepares a marked-up version or a full counter-LOI for the buyer to send to the seller. For LOIs that are mostly acceptable with specific targeted changes, the attorney may draft a brief issues letter identifying the changes requested and the rationale. Either approach gives the buyer a professional, organized set of proposed revisions rather than an informal email that invites the seller to dismiss the concerns.
4 Turnaround, Fees, and What to Expect
Buyers under time pressure need clear expectations on timing and cost before engaging. Here is how LOI review engagements work at Acquisition Stars.
Turnaround
- 1 Standard turnaround is 24 to 48 business hours from receipt of the LOI and deal background.
- 2 Expedited review for signing deadlines under 24 hours is available subject to attorney availability. Flag this at the time of your request.
- 3 The debrief call is scheduled within 24 hours of the review being delivered. If you have a negotiation deadline, that timeline drives scheduling.
Fees
- 1 LOI review engagements are handled on an hourly basis. The scope and LOI complexity determine the total hours. Most standard LOI reviews are completed within a defined hour range quoted upfront.
- 2 SBA LOI reviews take longer than conventional LOI reviews because of the additional SBA compliance analysis required.
- 3 Buyers who engage Acquisition Stars for the full acquisition after the LOI review receive the LOI review as part of the full engagement scope. You are not paying twice for overlapping work.
Who LOI Review Is For
Acquisition Stars' LOI review service is designed for buyers who have identified a target, are in active LOI negotiations, and need attorney input before signing. The typical buyer in this situation has received an LOI from a business broker, has been asked to sign within a short window, and is not yet sure whether to engage the firm for the full acquisition or just needs the immediate LOI issue resolved.
Buyers who are earlier in the process, who are drafting an LOI from scratch to submit to a seller, are also within scope. For drafting guidance, see letter of intent to buy a business.
What to Bring to the Initial Consultation
- -The LOI document (draft or received version)
- -Any background on the deal: type of business, purchase price, financing source (SBA, bank, seller-financed, other)
- -The signing deadline or seller's requested timeline
- -Whether this is a broker-prepared LOI or one the buyer is drafting
- -Any specific provisions that have already been identified as concerns
Have an LOI to Review?
If you are facing a signing deadline, request a consultation now. Alex Lubyansky reviews every LOI personally. Nationwide. 24 to 48 business hour turnaround for standard reviews.
Request LOI Review Consultation5 Frequently Asked Questions
Should I have a lawyer review my letter of intent before signing?
Yes. The LOI is the most important document in a business acquisition that most buyers underestimate. Although most LOI terms are non-binding, the exclusivity clause, no-shop provision, and confidentiality obligations are typically binding the moment you sign. An attorney review before signing catches problems in the binding provisions, identifies missing contingencies (financing, due diligence), flags earnest money terms that create too much risk, and ensures the purchase price mechanics are fair. The cost of a pre-signing LOI review is far less than the cost of signing a poorly drafted LOI and being locked into its terms during a 60-day exclusivity period.
What does an attorney look for when reviewing an LOI to buy a business?
An attorney reviewing a business acquisition LOI focuses on: whether the exclusivity period is appropriate in length and contains extension language; whether the financing contingency is properly drafted with an adequate timeline and triggers; whether the due diligence contingency is present and protects the buyer's ability to exit on material findings; whether the earnest money deposit amount and refund conditions are balanced; whether the purchase price and deal structure are accurately reflected; whether no-shop and confidentiality provisions are appropriately scoped; and whether SBA-specific provisions are present if the deal is financed with an SBA loan.
How long does an attorney LOI review take?
A standard LOI review for a business acquisition takes 24 to 48 business hours once the attorney has the LOI and any relevant background on the deal. Time-sensitive reviews may be completed faster depending on attorney availability. The review includes written comments or a redlined draft of the LOI with explanations of each suggested change.
What is a no-shop clause in a business acquisition LOI?
A no-shop clause (also called an exclusivity clause) is a binding provision in most LOIs that prohibits the seller from soliciting or accepting other offers during the exclusivity period after the LOI is signed. From the buyer's perspective, the no-shop clause gives you time to complete due diligence and negotiate the purchase agreement without competition. But a buyer who signs an LOI with an excessively long exclusivity period, or one with automatic extension language that favors the seller, may find themselves locked out of other opportunities if the deal falls through late in the process. An attorney reviews the no-shop to confirm the length is appropriate, the triggers are clear, and the buyer has adequate exit rights.
What happens if I sign an LOI without a financing contingency?
If you sign an LOI without a financing contingency and your SBA loan or other financing falls through, you may lose your earnest money deposit and potentially face liability for failing to close. A properly drafted financing contingency allows you to exit the deal without penalty if your financing is denied or if the lender's terms are materially different from what was anticipated. For SBA deals, the financing contingency should specify the SBA 7(a) program, an adequate timeline for underwriting (typically 45 to 90 days), and clear conditions under which the contingency can be invoked.
How much earnest money is standard in a business acquisition LOI?
Earnest money deposits in small business acquisitions typically range from 1% to 5% of the purchase price, though the amount is negotiated. More important than the amount are the refund conditions: under what circumstances does the buyer get the deposit back, and under what circumstances does the seller keep it. An LOI that conditions earnest money refund only on seller default is very different from one that also refunds if the financing contingency fails or if due diligence reveals a material issue. The attorney review ensures the earnest money provisions do not expose the buyer to unfair forfeiture.
What LOI provisions are actually legally binding?
In a typical business acquisition LOI, three categories of provisions are legally binding: the exclusivity or no-shop clause, which prevents the seller from shopping the deal during the exclusivity period; confidentiality obligations, which prevent both parties from disclosing deal terms or using confidential information outside the transaction; and any expense or break-up fee provisions. All other LOI terms, including purchase price, deal structure, representations, and transition terms, are generally non-binding until the purchase agreement is executed. However, the non-binding provisions set the expectations and precedent for the purchase agreement negotiation, so getting them right at the LOI stage matters.
Can I negotiate LOI terms after the broker has already presented it to the seller?
Yes. The LOI is a negotiated document. A buyer who receives a seller-prepared or broker-prepared LOI can and should mark it up with attorney guidance before countering or signing. In most owner-operated business acquisitions, it is completely normal to negotiate LOI terms through one or two rounds of revisions before both parties sign. Waiting until after the LOI is signed to raise issues about exclusivity length, earnest money conditions, or financing contingency language is the wrong sequence. Those terms should be resolved before signing.
Does Acquisition Stars offer LOI review for SBA-financed acquisitions?
Yes. SBA-financed acquisitions have specific LOI requirements that differ from conventional deals: the financing contingency must reference the SBA 7(a) program and include an adequate underwriting timeline, the seller note terms must be addressed at the LOI stage, and SBA eligibility must be confirmed before exclusivity begins. Acquisition Stars reviews LOIs specifically for SBA buyers and identifies the SBA-specific language that general business attorneys often miss. The firm handles SBA buyer counsel nationwide.
Related Resources
What Is a Letter of Intent?
The complete guide to LOI structure, binding vs. non-binding provisions, and where LOIs fit in the acquisition process.
Letter of Intent to Buy a Business
How to draft an LOI for a business acquisition: clause-by-clause guidance and templates for asset and stock purchase deals.
Small Business Acquisition Attorney
Full-deal SBA buyer counsel: LOI through closing, SBA compliance, seller note structuring, and entity formation. Nationwide.
SBA LOI Requirements
The specific provisions SBA lenders require in a letter of intent before they begin underwriting the acquisition loan.
LOI Earnest Money Deposit
How earnest money works in business acquisitions, typical amounts, and what refund conditions to negotiate before signing.
LOI Exclusivity Period
How long exclusivity should last, extension mechanics, and what the no-shop clause should and should not prohibit.
Binding vs. Non-Binding LOI Provisions
Which LOI terms create enforceable obligations and which set expectations only. Critical reading before signing anything.
LOI Red Flags
The provisions in a business acquisition LOI that signal the seller or broker is not negotiating in the buyer's interest.
Request LOI Review Consultation
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