Letters of Intent: What Happens Next

Most LOI advice tells you what to put in one. This article covers what happens after you sign it, because that's where deals actually get complicated. We've watched hundreds of deals move through the LOI-to-close phase on Rejigg, and the pattern of where things go smoothly versus where they fall apart is surprisingly consistent.

What Is an LOI, Exactly?

A letter of intent is a document where a buyer puts their proposed deal terms in writing. It covers the purchase price, how they plan to pay for it, what's included in the sale, and a rough timeline. Most of the LOI is non-binding, meaning neither side is legally locked in. The two parts that usually are binding: a confidentiality clause and an exclusivity period (meaning you agree to stop talking to other buyers for a set number of weeks).

Think of it as a handshake in writing. It says "here's what I'm willing to do" and gives both sides enough certainty to justify spending real time and money on the next phase.

The Moment You Get One

Getting your first LOI feels different than you'd expect. Most owners describe a mix of excitement and dread. Excitement because someone just put a real number on paper for the business you built. Dread because now it feels real in a way it didn't before.

This is normal. Every owner we've worked with has had some version of that reaction.

The important thing is to read the LOI carefully before your emotions settle into a response. Look at the full picture: the purchase price, yes, but also the structure. Is it all cash at close?

Is there an earnout (where part of the price depends on future performance)? Is the buyer asking you to finance part of the deal? A $5 million offer with $2 million in seller financing and a $1 million earnout is a very different deal than $5 million cash at close.

If you're fielding offers through Rejigg's deal dashboard, you can compare these terms side by side. That makes it much easier to evaluate what each buyer is actually proposing versus what the headline number suggests.

What Changes After You Sign

The pace picks up

Before the LOI, conversations tend to be exploratory. Buyers ask broad questions. Scheduling is casual.

After signing, everything accelerates. You'll start getting detailed financial requests within days. The buyer's accountant and attorney will get involved. Calls get longer and more specific.

Exclusivity changes the dynamic

Most LOIs include an exclusivity period, usually 60 to 90 days. During that window, you've agreed not to negotiate with other buyers. This tilts the dynamic toward the buyer, which is why the length of that exclusivity period matters.

Thirty days is aggressive. Ninety days is common. Anything beyond 90 days should make you ask why they need that much time.

The tone shifts

Before the LOI, the buyer is selling themselves to you. After it, they're verifying that what you told them is accurate. Questions get more pointed.

"Tell me about your team" becomes "Show me the employment agreements and the last two years of payroll." This shift catches a lot of owners off guard. The relationship feels different, and it's supposed to. Due diligence is naturally more adversarial than courtship.

The Due Diligence Clock Starts

Due diligence is the buyer's chance to verify everything about your business before committing. It typically covers financials, legal, operations, customers, and employees. The clock starts ticking as soon as the LOI is signed.

Here's what usually happens in the first two weeks:

• The buyer sends a due diligence request list (often 40 to 80 line items)
• You start pulling financial statements, tax returns, contracts, and employee records
• The buyer's accountant begins a Quality of Earnings analysis (a detailed audit of your reported earnings to confirm they're accurate and repeatable)

Having your documents organized before this phase saves you weeks of stress. Rejigg's built-in data room lets you upload and organize everything in one place, control who sees what, and avoid the nightmare of sending sensitive financials over email.

The speed at which you respond to due diligence requests sends a signal. Fast, organized responses tell the buyer you run a tight operation. Slow, scattered responses make them wonder what else is disorganized.

Common Surprises During LOI to Close

Working capital adjustments

This is probably the most common surprise for first-time sellers. Most deals include a working capital target, which is the amount of cash, inventory, and receivables you're expected to leave in the business at closing. If the actual number at close is lower than the target, the purchase price gets reduced. If it's higher, you get more.

The surprise comes because many owners don't think about this until late in the process. They might pull cash out of the business between signing the LOI and closing, not realizing that lowers the working capital and reduces their sale price.

Employee conversations

Buyers almost always want to talk to key employees before closing. This creates an awkward situation because most owners haven't told their team about the sale. You'll need to figure out who to tell, when to tell them, and how to frame it. The buyer will usually let you control the timing, but this conversation is coming and you should prepare for it.

Lease assignments

If your business operates from a leased space, the landlord usually needs to approve the transfer. Some landlords are easy. Others use this as an opportunity to renegotiate terms. Start this conversation early because a stubborn landlord can delay or kill a deal.

Customer concentration concerns

If the buyer discovers that a large percentage of your revenue comes from one or two customers, expect follow-up questions. They'll want to understand what makes those relationships sticky and what happens if one of those customers leaves after the sale.

Re-trading: When Buyers Try to Renegotiate

Re-trading is when a buyer uses findings from due diligence to push for a lower price after the LOI is signed. Some amount of this is legitimate. If due diligence reveals that revenue was overstated or a major customer is about to leave, a price adjustment makes sense.

But some buyers use re-trading as a strategy. They submit a strong LOI to lock up exclusivity, then chip away at the price once you've stopped talking to other buyers and invested weeks in the process. Here's what that usually looks like: the buyer finds something in diligence that was already discussed or disclosed, then frames it as new information that justifies a lower price.

The best protection against re-trading is full disclosure upfront. If you've been transparent about the business from the beginning, a buyer has much less room to claim surprise. If a buyer starts re-trading on things you already told them about, that tells you something about how they'll behave after the sale too.

How Long From LOI to Close?

Most deals close 60 to 90 days after the LOI is signed. SBA-financed deals (where the buyer is using a government-backed loan) tend to take longer because the lender has their own diligence process on top of the buyer's. Budget 90 to 120 days for SBA deals.

Here's a rough breakdown of what happens when:

• Weeks 1-3: Due diligence document exchange and initial review
• Weeks 3-6: Quality of Earnings, legal review, employee and customer conversations
• Weeks 6-8: Purchase agreement drafting and negotiation
• Weeks 8-12: Final approvals, financing confirmation, lease assignments, closing

Delays usually come from three places: slow document delivery (your side), financing issues (buyer's side), or third-party approvals like landlords and licensing boards (neither side's fault but both sides' problem).

When to Walk Away From an LOI

You always retain the card to walk away. The non-binding sections of an LOI mean exactly that. Here are situations where walking away is worth serious consideration:

• Repeated re-trading. One price adjustment based on real findings is normal. Three rounds of "we found something else" is a pattern.
• Missed deadlines. If the buyer keeps asking to extend exclusivity without making real progress, they may not have the financing or the conviction to close.
• Bad personal fit. If the buyer is going to run your business and interact with your employees and customers, how they behave during diligence tells you a lot about how they'll behave as an owner.
• Gut feeling. Experienced sellers and advisors will tell you the same thing: if something feels off at this stage, it usually gets worse, not better.

Walking away after weeks of diligence is painful. But closing a bad deal is worse.

Handling Multiple LOIs

If your business is attractive enough to generate multiple LOIs, you're in a strong position. Use it wisely.

The key decision is whether to sign one LOI with exclusivity or try to negotiate without granting exclusivity. Most buyers won't proceed without exclusivity because due diligence costs them real money (legal fees, accounting fees, their time). So in practice, you'll usually need to pick one buyer.

When comparing LOIs, look beyond the headline price. Consider:

• Deal structure: Cash at close versus earnouts versus seller financing
• Certainty of close: Does the buyer have financing secured, or are they still looking for it?
• Timeline: How fast can they close?
• Cultural fit: Who do you want running this business after you?

Rejigg's deal dashboard lets you track multiple conversations and compare offer terms side by side, so you can make this decision with clear data instead of gut feel.

If you do receive multiple LOIs, be honest with the buyers you don't choose. M&A is a small world, and the buyer you pass on today might be the right fit for a different deal tomorrow.

The Finish Line

The period between signing an LOI and closing is the most intense part of selling a business. Things move fast, the stakes feel real, and there are more ways for a deal to stall than most owners expect.

The owners who handle it best share a few traits: they prepared their documents early, they were transparent about the business from the start, and they kept communicating clearly even when questions got uncomfortable.

If you're thinking about selling your business, start preparing now. Get your financials clean, understand your numbers, and use tools that keep you organized. Rejigg is free for sellers, and the platform handles everything from buyer vetting to document sharing to offer comparison. List your business here.

Frequently Asked Questions

How long does it take to close after signing an LOI?

Most deals close 60 to 90 days after the LOI is signed. SBA-financed deals typically take 90 to 120 days because the lender runs their own due diligence process on top of the buyer's review. Delays usually come from slow document delivery, financing hiccups, or third-party approvals like landlord consent or license transfers.

Can you back out of a letter of intent?

Yes. The core terms of most LOIs are non-binding, meaning either side can walk away. The exceptions are usually the confidentiality and exclusivity clauses, which are binding. If you back out, you'll need to honor any exclusivity period that hasn't expired, but you're not obligated to sell.

What is re-trading in a business sale?

Re-trading is when a buyer uses due diligence findings to push for a lower purchase price after the LOI is signed. Some re-trading is legitimate if real issues surface. But aggressive re-trading on items that were already disclosed is a negotiation tactic. Full transparency from the start is your best defense.

Should I sign an LOI with exclusivity?

Most buyers require exclusivity before they'll spend money on due diligence, so you'll usually need to grant it. Keep the period as short as reasonable, typically 60 to 90 days. Push back on anything longer than 90 days and include milestones the buyer must hit to maintain exclusivity.

Can I negotiate the terms of an LOI before signing?

Absolutely. The LOI is a starting point, not a take-it-or-leave-it document. Common negotiation points include purchase price, exclusivity length, earnout terms, and the due diligence timeline. Most buyers expect some back and forth before both sides sign.