Business Sale LOI Template: What Sellers Should Require Before Signing in 2026

The Letter of Intent (LOI) is the most consequential document in any business sale — more important than the eventual Purchase and Sale Agreement (PSA), more important than the NDA, more important than the diligence package. It’s the document that locks in price, structure, exclusivity, and the framework for everything that follows. It’s also the document where the seller has maximum leverage, because the buyer has been competing for the deal up to this point and is willing to commit to favorable terms to lock in exclusivity. Once the LOI is signed and exclusivity begins, leverage shifts to the buyer — they have weeks of diligence time, the seller has stopped talking to alternatives, and the buyer can find reasons to re-trade or walk if terms aren’t favorable to them. Most LOI mistakes are made by sellers who don’t understand the leverage dynamic and treat the LOI as preliminary. For a deeper look, see our guide on letter of intent business purchase. For a deeper look, see our guide on letter of intent what it means and what to watch for.

This guide is a seller-side LOI template covering the eight specific terms sellers should require before signing. We’ll walk through price + adjustment methodology, exclusivity duration and termination triggers, diligence period scope and timeline, financing contingency specificity, conditions to close, working capital target methodology, escrow and indemnification framework, and explicit walk triggers. We’ll also cover the common buyer LOI traps (vague language patterns that give buyers flexibility to re-trade), how the LOI process works tactically (timing, drafting, negotiation), and how the LOI mechanics differ across buyer archetypes (SBA buyers, search funders, PE platforms, strategics).

The framework draws on direct work with 76+ active U.S. lower middle market buyers and the broader sub-LMM ecosystem. We’re a buy-side partner. The buyers pay us when a deal closes — not the seller. That includes SBA 7(a)-financed individuals (where the LOI must address SBA loan timing and contingencies), search funders (where the LOI must address investor approval), independent sponsors (where the LOI must address capital raise timing), family offices, lower middle-market PE platforms (Audax Group, Trivest Partners, Riverside Company, MidOcean Partners), and strategic acquirers (Watsco, Comfort Systems USA, APi Group, Heartland Dental, Mars Veterinary Health). Each archetype has specific LOI mechanics, but the seller’s leverage principles are universal.

One critical framing note before we start. An LOI is generally non-binding except for specific provisions (exclusivity, confidentiality, expense allocation). The non-binding nature is often used by inexperienced sellers as a reason to be flexible on terms (‘it’s just an LOI, we’ll firm it up later’). This is exactly backwards. Because the LOI is non-binding, both parties rely on the LOI as the framework for everything that follows. Vague LOI terms create vague PSA negotiations; specific LOI terms create specific PSA negotiations. Get specific now, while the buyer is still competing, or accept that you’ll be defending less-favorable interpretations during diligence.

“Every veteran seller learns the same lesson: the LOI is where the deal is actually negotiated. The Purchase and Sale Agreement is just paperwork that codifies what was already agreed. Sellers who treat the LOI as preliminary — ‘we’ll figure it out in the PSA’ — lose ground every time the deal is reopened during diligence. Sellers who lock in specifics at LOI walk into the PSA negotiation defending what was already won.” For a deeper look, see our guide on loi meaning letter of intent business sale.

Key Takeaways

• Eight LOI terms must be specific: price + adjustment methodology, exclusivity duration with termination triggers, diligence period scope, financing contingency with lender names, conditions to close, working capital target methodology, escrow/indemnification framework, walk triggers.
• Exclusivity: 30-60 days for sub-$10M deals, 60-90 days for $10M+. Auto-terminate on material deal modification, financing failure, or bad-faith conduct.
• Price language: specific number, not range. Adjustment methodology specific (working capital target, debt-free/cash-free, allocation between asset categories). Earnouts, if any, with specific metrics, measurement period, and protections against buyer manipulation.
• Financing contingency: name the lender (specific SBA bank, specific senior debt provider, specific equity source), require commitment letter or term sheet within X days, define financing-failure triggers.
• Working capital: specify target methodology (trailing 12-month average vs trailing 6-month, specific items included/excluded), define dispute resolution.
• Common buyer LOI traps: vague price ranges, open-ended exclusivity, undefined diligence, ‘customary’ without specifics, missing walk triggers. Each trap costs the seller $100K-$1M+ in post-LOI re-trade exposure.

Why the LOI is the seller’s peak leverage moment

Deal leverage is asymmetric across the sale process and the LOI is the inflection point. Pre-LOI, multiple buyers are typically engaged or could be engaged; the seller has optionality and the buyers know it. The buyer who wants the deal has to commit to favorable terms to lock in exclusivity. Post-LOI, exclusivity prevents the seller from engaging alternatives; the buyer has weeks of diligence time during which any finding can be used to re-trade or walk; the seller has signaled commitment by stopping outreach to other buyers. The leverage swing is dramatic and irreversible during the exclusivity period.

What buyers actually do during exclusivity. Conduct due diligence with the goal of validating the price and structure agreed in the LOI. Identify any findings that could be framed as material adverse change, breach of representation, or working capital surprise. Use those findings to either confirm the LOI terms (best case for seller), re-trade the price downward (most common case — observed re-trades average 5-15% on LMM deals), or walk away (worst case for seller, who then has to restart with another buyer or accept materially worse terms). The buyer’s incentive during exclusivity is to find reasons the LOI was over-priced; the seller’s incentive is to defend the LOI.

Why the seller has more leverage at LOI than they think. Multiple buyers usually exist or can exist. Even when one buyer has been clearly preferred during management meetings, alternatives remain accessible until the LOI is signed. Sophisticated sellers maintain backup conversations through the LOI process — not actively progressing them, but keeping them warm so the seller can re-engage if the primary deal collapses or re-trades excessively. Buyers know this and price LOI terms accordingly — if you’re willing to walk, you’ll get better terms.

What gets locked in at LOI vs negotiated later. Price (specific number, not range): locked. Structure (asset vs stock, cash vs equity mix): locked. Exclusivity period: locked. Diligence scope and timeline: locked (or should be). Financing contingencies: locked. Working capital methodology: locked. Major reps and warranties framework: outlined but specifics in PSA. Indemnification caps and survival: outlined but specifics in PSA. Specific PSA legal language: negotiated post-LOI. The boundary: anything that would change the economics of the deal should be locked at LOI; legal language can flex during PSA drafting.

The most expensive seller mistake. Treating the LOI as preliminary. Vague LOI terms (‘subject to standard adjustments,’ ‘customary diligence,’ ‘mutually acceptable structure’) feel non-committal and easy to sign. They are also exactly the language buyers want, because the vagueness gives them flexibility to interpret terms in their favor during diligence. Sellers who sign vague LOIs typically lose 5-15% of headline price during diligence as terms get ‘clarified’ in the buyer’s direction. On a $5M deal, that’s $250K-$750K.

Term 1: price and adjustment methodology

Price language in the LOI must be specific: a single dollar number, not a range. Buyer LOIs frequently include ranges (‘$5.0M-$7.0M, subject to diligence’) on the theory that diligence findings will produce the final number. This is exactly backwards from the seller’s perspective. The range gives the buyer license to land at the bottom of the range during diligence; the seller has no upward leverage from a range. Always require a specific number.

Specific number with adjustment methodology. ‘Purchase price: $6,500,000, subject to working capital adjustment as defined below, debt-free / cash-free at close.’ This language locks the price at $6.5M and only adjusts mechanically based on the working capital methodology. Compare to: ‘Purchase price approximately $6.5M, subject to standard purchase price adjustments and diligence.’ The latter is functionally a range that lands wherever the buyer claims is ‘standard.’

Asset allocation if asset sale. If structuring as an asset sale, specify allocation methodology in the LOI — not the specific allocations (those go in the PSA), but the methodology (‘allocation in accordance with IRC Section 1060 and Form 8594, with goodwill maximized to the extent supported by FMV of identifiable assets’). This protects the seller from buyer attempts during PSA drafting to shift allocation toward equipment (which is taxed as ordinary income recapture to seller, faster depreciation to buyer) and away from goodwill (capital gains to seller, slower amortization to buyer). Cross-reference our Asset vs Stock Sale guide.

Earnouts in the LOI. If any portion of the purchase price is earnout, specify in the LOI: total earnout amount, measurement period (12-36 months typical), specific metrics (revenue or gross margin, NOT EBITDA — too easy for buyer to manipulate), measurement methodology (specific accounting standards), payment schedule, acceleration triggers (sale of business during earnout period, change of control, material breach by buyer). Vague earnout language (‘additional consideration based on performance’) is the most expensive trap in the LOI universe — buyers can interpret earnout payments in their favor for years post-close.

Rollover equity if applicable. If any portion of the purchase price is rollover equity into a buyer-controlled entity (PE platform rollover, search fund operator equity, etc.), specify in the LOI: rollover amount and percentage of post-close entity, vesting schedule, put/call rights, drag-along and tag-along provisions, information rights, board representation if applicable, exit-event treatment. Rollover equity is illiquid until the buyer’s exit event — specifying these terms at LOI prevents post-close rollover from becoming an unmarketable security.

Common price language traps. ‘$X subject to satisfactory diligence’ without defining satisfactory: gives buyer unilateral right to re-trade. ‘$X subject to confirmation of EBITDA’ without specifying methodology: invites EBITDA disputes during diligence. ‘Purchase price approximately $X’: range without acknowledging it. ‘$X plus customary working capital adjustment’ without defining customary: working capital amounts can swing 10-25% on $1M revenue businesses, which is huge dollar exposure. Each of these patterns has cost specific sellers $100K-$500K in observed deals.

Term 2: exclusivity duration and termination triggers

Exclusivity is what the seller gives the buyer in exchange for the LOI. The seller agrees not to engage with other buyers, not to actively market the business, and not to entertain competing offers during the exclusivity period. The buyer in exchange invests in diligence and prepares for close. The exclusivity period must be specific (with start and end dates) and must include termination triggers that protect the seller from buyers who fail to perform during the period.

Standard exclusivity durations by deal size. Sub-$5M EV deals: 30-45 days. $5-10M EV: 45-60 days. $10-25M EV: 60-75 days. $25M+ EV: 75-90 days. Anything longer than 90 days is a red flag — either the deal is unusually complex (multi-jurisdictional, regulated industry) or the buyer is using exclusivity to slow-roll. Sellers should resist 120-day exclusivity unless there’s a specific structural reason.

Specific termination triggers. Auto-termination if: buyer materially modifies LOI terms (price reduction beyond X%, structural changes), buyer fails to deliver written financing commitment within Y days, buyer fails to engage QoE provider within Z days, buyer materially breaches confidentiality, mutual agreement of parties. The triggers should be specific and self-executing — the seller shouldn’t need to negotiate termination, it should automatically convert exclusivity to non-exclusivity if the trigger event occurs.

What exclusivity does NOT prohibit. Continued response to inbound inquiries (you can’t solicit other buyers but you don’t have to refuse to talk to them). Continued operations of the business in normal course (don’t make material changes that would require buyer approval). Maintaining backup buyer relationships (you can’t actively progress them but you can keep them warm). Hiring advisors and continuing prep work for close. Sellers sometimes over-interpret exclusivity and shut down all parallel processes; this destroys their negotiating leverage post-LOI.

Extending exclusivity. Buyers occasionally request exclusivity extensions during diligence. The seller should resist routine extensions (they signal buyer execution problems) and grant only specific limited extensions tied to identifiable diligence completion (‘15-day extension to complete QoE rebuild on disputed addbacks’). Each extension should be paired with concession from the buyer (e.g., increased deposit, more specific commitment to close, narrower remaining diligence scope). Open-ended extensions destroy seller leverage.

Break-up fees and deposits. Some sophisticated sellers require buyer break-up fees or deposits to enforce exclusivity. Break-up fee: buyer pays seller a specific amount if they walk away after LOI signing without a defined-trigger event. Deposit: buyer puts cash in escrow that is forfeit if they walk without defined trigger. These are most common in $10M+ EV deals or where the buyer has weak track record. Independent sponsors and first-time individual buyers occasionally include these to demonstrate seriousness; established PE platforms and strategics rarely will.

Term 3: diligence period scope and timeline

The LOI should specify what diligence the buyer is entitled to conduct and on what timeline. Vague diligence language (‘customary diligence including financial, operational, legal, and other matters’) gives the buyer license to extend diligence indefinitely and request information beyond reasonable scope. Specific diligence language constrains the buyer to a defined scope and timeline, which is essential for protecting seller interests during exclusivity.

Diligence categories and typical timelines. Financial diligence (Quality of Earnings): typically 3-6 weeks. Legal diligence (corporate, contracts, IP, regulatory, litigation): 4-8 weeks. Operational diligence (customer interviews, employee interviews, facility visits): 3-6 weeks. Tax diligence (federal, state, local, sales tax): 2-4 weeks. Commercial diligence (market position, competitive analysis): 2-6 weeks if conducted. Insurance / risk diligence: 2-3 weeks. Most categories run in parallel, so the total exclusivity period covers the longest individual category.

Specifying diligence access. Reasonable business hours access to financial records, operational data, and management. Specific list of personnel the buyer can interview (with seller’s involvement / approval). Customer interview access only with seller’s prior approval and joint participation (protects seller from buyer poaching customers if deal doesn’t close). Employee interview access only at specific predetermined times (typically just before close). Document access through structured data room with reasonable response timelines for additional document requests.

What the seller should NOT agree to. Open-ended diligence access without defined endpoint. Direct customer outreach without seller approval. Direct employee outreach (especially key employees) without scheduled approval. Provision of competitively sensitive information to buyer’s competing portfolio companies (some PE platforms hold competing assets — require segregation). Provision of non-public information to buyer’s strategic competitors. Customer reference calls before LOI is final (delay these to post-LOI exclusivity to maintain seller optionality).

Diligence scope creep prevention. Specify in the LOI that material additional diligence requests after Day X (typically 3-4 weeks into exclusivity) require seller’s approval and may extend exclusivity by mutual agreement. This prevents buyers from front-loading minimal diligence requests then dramatically expanding scope late in the period to extract leverage. Common buyer pattern: agree to 60-day exclusivity, conduct minimal diligence in first 30 days, then claim need for ‘additional diligence’ in days 30-60 to justify scope expansion or term changes.

Term 4: financing contingency and lender specificity

If the buyer’s deal depends on financing — SBA 7(a) loan, senior debt from a specific lender, equity capital raise — the LOI must specify the financing source, the timing for delivery of commitment, and the consequences of financing failure. Vague financing contingencies (‘subject to buyer obtaining acceptable financing’) give the buyer permission to walk for almost any reason. Specific financing contingencies constrain the buyer to actually attempt the financing and limit their walkaway options.

SBA 7(a) financing contingency specifics. Name the specific SBA bank (Live Oak Bank, Newtek Small Business Finance, Byline Bank, Celtic Bank, Huntington Bank, etc.). Require pre-qualification letter as exhibit to LOI. Require formal SBA loan application within 14 days of LOI signing. Require SBA commitment letter within 60 days of LOI signing. Define financing failure: SBA loan denial in writing, or SBA loan offered at materially worse terms than pre-qualification (interest rate >X%, loan amount <$Y, restrictive covenants beyond Z scope). If financing failure is genuine and timely, buyer walks without penalty; if financing failure is buyer-caused (credit events post-LOI, additional debt taken on, etc.), buyer’s deposit is forfeit.

Senior debt financing contingency specifics (PE platforms, larger deals). Name the specific lender (Twin Brook Capital Partners, Antares Capital, Churchill Asset Management, Ares Capital, Golub Capital, Monroe Capital, Audax Private Debt, etc.). Require term sheet within 21 days of LOI signing. Require commitment letter (not just term sheet) within 60-75 days. Specify acceptable terms (leverage ratio not below X, interest rate not above Y, covenants not more restrictive than Z). Define financing failure carefully — PE platforms have strong incentive to claim financing problems if they want to re-trade.

Equity capital contingency (independent sponsors, search funders). Independent sponsors raise capital deal-by-deal; their LOIs must specify capital-raise timing. Name the specific capital partners (family offices, HNWI groups). Require letter of interest from capital partners within 14 days. Require committed capital documentation within 45-60 days. Define capital failure trigger. Search funders have committed search capital but need investor approval for each acquisition; require investor approval timing (typically within 30 days of LOI signing) and define investor approval failure as a financing contingency trigger.

Strategic acquirer financing. Strategic acquirers typically don’t need external financing — they have balance sheet capacity, undrawn revolvers, or platform-level debt available. LOI should still confirm: source of funds (cash from balance sheet, drawing on revolving credit facility, parent company guarantee, etc.), board approval timing, any HSR or regulatory approvals needed (Hart-Scott-Rodino antitrust filings for deals above the HSR threshold, currently $119.5M in 2024, adjusted annually). For PE-backed strategics, confirm financing is at platform level (don’t require external new financing for the acquisition).

What ‘subject to financing’ means without specifics. Functionally a buyer’s right to walk for any reason. The buyer can claim financing problems as cover for diligence findings they don’t want to publicly cite, buyer’s remorse, market shifts, or simply changing their mind. Without specific lender names and commitment timelines, the financing contingency is unenforceable in practice. Sellers signing LOIs with vague financing contingencies are effectively giving the buyer free option throughout exclusivity.

Term 5: conditions to close

Conditions to close (CTCs) are the specific events that must happen between LOI signing and close for the deal to actually close. The LOI should specify all material CTCs, with the buyer’s commitment to satisfy them within the exclusivity period. Vague CTC language (‘subject to all closing conditions including those customarily found in transactions of this type’) gives the buyer license to add new conditions during diligence, which is leverage extraction in disguise.

Common buyer-side CTCs. Receipt of financing commitment(s). Completion of diligence (with definition of ‘completion’ or specific scope-and-timeline limit). Required regulatory approvals (HSR if applicable, state-specific licensure transfers, professional licensing transfers in healthcare/legal/accounting). Required third-party consents (lease assignments, key contract assignments, franchisor approval if franchised). Buyer’s board or investor committee approval (specific timeline). No material adverse change since LOI signing (with definition of MAC).

Common seller-side CTCs. Buyer’s payment of purchase price. Buyer’s execution of transition services agreement (if applicable). Buyer’s execution of consulting/non-compete with seller (if applicable). Buyer’s satisfaction of any closing-day deliverables (proof of insurance, board approvals, etc.).

Material Adverse Change (MAC) definition. MAC clauses give the buyer the right to walk if a material adverse change occurs in the business between LOI and close. Vague MAC (‘any material adverse change in the business or prospects’) gives the buyer broad walkaway right. Specific MAC defines exclusions: changes in general economic or market conditions, changes affecting the broader industry, changes in laws or regulations, ordinary course operations and customary fluctuations, force majeure events. Sellers should require specific MAC carve-outs to limit buyer walkaway optionality.

Buyer’s diligence-out clause. Some LOIs include buyer’s right to walk during a defined ‘diligence period’ without penalty. This is common in earlier-stage LOIs or when the buyer hasn’t had pre-LOI access to detailed diligence. Sellers should define the diligence period narrowly (10-30 days), require the buyer to disclose specific findings if walking (not just ‘we’re not satisfied’), and specify that walking after the diligence period requires a specific defined-trigger event (financing failure, material breach by seller, MAC).

Required third-party consents. Lease assignments: most commercial leases require landlord consent for change-of-control. Identify any change-of-control triggers in your lease before LOI signing — surprise refusals from landlords kill 5-10% of LMM deals. Key customer contracts: some have change-of-control termination clauses. Franchise agreements: franchisor approval is mandatory and non-negotiable in franchised businesses. Professional licenses: state-specific in dental, medical, legal, accounting practices. The LOI should require the seller to disclose all change-of-control triggers and the buyer to handle approval requests with reasonable diligence.

Term 6: working capital target methodology

Working capital adjustment is one of the largest dollar-exposure items in any deal. On a $5M revenue business, working capital can swing $250K-$750K depending on methodology — that’s 5-15% of a $5M deal. Yet many LOIs handle working capital with a single line: ‘subject to standard working capital adjustment.’ This is a major seller risk that locks in the buyer’s preferred methodology. The LOI should specify the working capital target methodology in detail.

What working capital adjustment actually does. The buyer expects to receive normal operating working capital with the business at close — receivables, inventory, prepaid expenses, less accounts payable and accrued liabilities. If the actual working capital at close is below the agreed target, the buyer pays less; if above, the buyer pays more. Without an agreed target, the buyer claims the appropriate target is the trailing-month figure (which is usually low because you’ve drained working capital pre-close), and the seller pays for the difference.

Specifying working capital target methodology. Target setting: trailing 12-month average is standard, occasionally trailing 6-month for high-seasonality businesses. Items included: AR, AR allowance, inventory at specific valuation methodology (FIFO/LIFO/specific), prepaid expenses. Items excluded: cash (cash-free deal), debt and debt-like items (debt-free deal), specific deferred revenue treatments. Methodology document: ‘working capital target = trailing 12-month average of (AR + Inventory + Prepaid Expenses) – (AP + Accrued Liabilities), excluding cash and debt-like items, calculated on accrual basis as reflected in monthly internal financial statements.’

Worked example. $5M revenue business with $750K typical working capital. Trailing 12-month average: $750K (target). Actual at close: $700K. Seller pays $50K to buyer at close (or reduces purchase price by $50K). If actual is $850K, buyer pays additional $100K to seller. Without methodology specified, buyer might claim target is $850K (the trailing 30 days, just before seller drained cash-equivalents pre-close) and demand $150K from seller. The methodology is the difference between $50K and $150K of seller exposure on this single line item.

Common working capital traps. ‘Subject to working capital adjustment’ without methodology: invites buyer to set methodology unilaterally during diligence. Trailing-30-day or trailing-3-month target on a seasonal business: usually disadvantages the seller. Inclusion of items in working capital that aren’t actually working capital (long-term deferred items, non-operating items): disadvantages the seller. Failure to specify dispute resolution mechanism: leads to unresolvable disagreements at close. Always require independent third-party arbitration (typically the QoE provider or an independent CPA firm) for working capital disputes.

Term 7: escrow and indemnification framework

Escrow and indemnification protect the buyer against seller breaches of representations and warranties post-close. Escrow holds back a percentage of purchase price for a defined period to satisfy claims; indemnification specifies the seller’s liability framework. Both should be outlined in the LOI — not in detailed PSA language, but with the framework specified so buyer’s drafted PSA can’t expand seller exposure beyond what was agreed.

Standard escrow framework 2026. Escrow amount: 10-15% of purchase price typical, 5-10% with rep and warranty insurance backstopping. Escrow period: 12-24 months for general indemnification, longer for specific tax / fundamental rep matters (3-6 years for fundamental reps, statute of limitations + 60-90 days for tax). Escrow agent: established escrow agent (Citizens Bank, JPMorgan, escrow specialty firms) with documented procedures. Disputed claim handling: independent arbitration (typically AAA commercial rules or specific named arbitrator).

Indemnification framework. Cap on general indemnification: 10-15% of purchase price typical (matching escrow), 5-10% with R&W insurance. Cap on fundamental reps (organization, capitalization, taxes, environmental): higher cap, sometimes uncapped for specific items. Survival period: 12-24 months for general reps, 3-6 years for fundamental reps, statute of limitations for tax. Basket / threshold (also called ‘deductible’): typically $25K-$100K basket below which claims aren’t paid; once basket is exceeded, claims paid from dollar one or paid above the basket depending on structure. Tipping basket vs deductible basket: clarify which structure.

Reps and warranties insurance. On $5M+ EV deals, buyer often purchases R&W insurance to backstop indemnification. Premium: 2-4% of policy limit (typically $5-25K per million of coverage). Retention: 1% of EV typical. Effect on seller: reduces escrow requirement (often to 0.5-1% of EV vs 10-15% without insurance), shortens seller’s tail liability, allows buyer to recover from insurance rather than seller. Cross-reference our R&W insurance cost guide. The LOI should specify whether R&W insurance will be used and which party pays the premium.

Specific exclusions from indemnification. Pre-existing tax issues should be in indemnification (seller pays). Environmental issues should be in indemnification with specific carve-outs (seller pays for pre-existing, buyer pays for post-close). Litigation pending at close: specifically allocated. Customer concentration changes post-close: typically buyer risk (not in indemnification). Material change in working capital: typically working capital adjustment, not indemnification. Specify each in the LOI.

Term 8: seller-side walk triggers and protections

Most LOIs are heavily protective of buyer interests (financing contingencies, MAC, diligence-out, etc.) and include almost no seller-side protections. This is asymmetric and reflects the fact that buyer counsel typically drafts the LOI. Sellers should require specific seller-side walk triggers and protections to balance the asymmetry. The LOI is the only opportunity to negotiate these — once signed, they’re locked in.

Seller walk trigger 1: buyer financing failure. If buyer fails to deliver financing commitment by specified date, seller has the right to terminate exclusivity and pursue alternatives. This converts what was a passive contingency into an active termination right. Important: distinguish between buyer-caused financing failure (e.g., buyer takes on additional debt that disqualifies them from SBA loan, buyer’s credit deteriorates) and external financing failure (e.g., lender market changes, rates shift dramatically). Buyer-caused failure should trigger forfeit of any deposit; external failure should not.

Seller walk trigger 2: material LOI modification by buyer. If buyer attempts to materially modify LOI terms post-signing (price reduction beyond X%, structural changes, scope expansion), seller can terminate exclusivity. The threshold should be specific: ‘Any reduction in purchase price greater than 5% from the LOI price, any change in deal structure, or any expansion of buyer’s diligence rights beyond what was specified at LOI signing, shall constitute a material modification permitting Seller to terminate exclusivity.’

Seller walk trigger 3: bad-faith conduct. If buyer conducts diligence in bad faith (using diligence to extract leverage rather than evaluate the deal), discloses confidential information beyond permitted scope, attempts to poach customers or employees, or otherwise breaches the cooperation obligations of the LOI, seller can terminate exclusivity. Bad-faith conduct can be hard to prove, so the LOI should include specific examples (unauthorized customer contact, unauthorized employee contact, public disclosure) and a notice-and-cure mechanism.

Seller protection 1: continued operations rights. During exclusivity, seller continues to operate the business in normal course. The LOI should specify that seller doesn’t need buyer approval for ordinary course transactions: routine vendor relationships, normal-course capital expenditures, routine personnel decisions, day-to-day operational decisions. Buyer approval is required only for material out-of-ordinary-course actions: large new contracts above a threshold, major capital expenditures, executive hiring, material litigation settlement, etc. This prevents buyer from using exclusivity to constrain seller’s normal operations.

Seller protection 2: information protection. Beyond the NDA, the LOI should specify protections for seller information: limited disclosure to buyer’s advisors only (no disclosure to buyer’s portfolio companies, related entities, or strategic partners), specific data segregation requirements for PE platforms with competing portfolio companies, return or destruction of all materials if deal doesn’t close. The seller’s information advantage during diligence is significant; protecting against information leakage post-non-close is critical.

Seller protection 3: expense allocation. Each party typically bears their own LOI and PSA legal/advisor fees through close. The LOI should specify this. Some LOIs include buyer’s right to recover certain expenses (financing fees, QoE) from seller if seller breaches; sellers should resist these or limit them to specific defined breaches. Buyer’s break-up fee (if applicable) goes to seller; not standard in LMM but increasingly common.

Common buyer LOI traps and how to spot them

Buyer-drafted LOIs include specific traps designed to give the buyer flexibility at the seller’s expense. These traps look like minor language choices but have major dollar consequences during diligence and PSA negotiation. Below are the most common traps and how to convert them into seller-protective language.

Trap 1: price ranges instead of specific numbers. Buyer language: ‘Purchase price between $5.0M and $7.0M, subject to confirmation in diligence.’ This is a free option for the buyer to land at $5.0M during diligence. Seller revision: ‘Purchase price: $6.5M, subject only to working capital adjustment and other specific adjustments defined herein. Diligence findings shall not modify the purchase price except as specifically defined.’

Trap 2: vague exclusivity termination. Buyer language: ‘Exclusivity period of 90 days, extendable by mutual agreement.’ This gives the buyer license to extend repeatedly. Seller revision: ‘Exclusivity period of 60 days. Any extension requires written mutual agreement and shall not exceed 30 days. Exclusivity terminates automatically if Buyer fails to deliver financing commitment by Day 45 or breaches material terms of this LOI.’

Trap 3: customary diligence without scope. Buyer language: ‘Buyer shall conduct customary diligence including financial, legal, operational, regulatory, and other matters reasonably related to the proposed transaction.’ Open-ended. Seller revision: ‘Buyer’s diligence is limited to: (i) financial diligence including QoE engagement; (ii) legal diligence on corporate, contracts, IP, regulatory, and litigation; (iii) operational diligence including up to two facility visits and management interviews; (iv) tax diligence on federal, state, local, and sales tax. Customer interviews and employee interviews require Seller’s prior written approval. Material expansions of scope require Seller’s written consent.’

Trap 4: financing contingency without lender. Buyer language: ‘Subject to Buyer’s receipt of acceptable financing on terms reasonably acceptable to Buyer.’ This is unenforceable from the seller’s perspective. Seller revision: ‘Subject to Buyer’s receipt of financing from [specific lender name, e.g., Live Oak Bank for SBA 7(a) of up to $X with a personal guarantee from Buyer, on terms substantially similar to the pre-qualification letter attached as Exhibit A]. If financing is not received by Day 60, this LOI may be terminated by either party.’

Trap 5: working capital adjustment without methodology. Buyer language: ‘Subject to working capital adjustment to be calculated at close.’ Seller revision: ‘Working capital target shall be the trailing 12-month average of (AR + Inventory + Prepaid Expenses) – (AP + Accrued Liabilities), excluding cash and debt-like items, calculated on the accrual basis as reflected in Seller’s monthly internal financial statements. Adjustment to purchase price equals (Actual Working Capital at Close – Working Capital Target). Disputes resolved by [named third-party CPA] within 30 days of close.’

Trap 6: MAC without exclusions. Buyer language: ‘Buyer’s obligation to close is conditioned on no Material Adverse Change occurring between LOI signing and close.’ Open-ended. Seller revision: ‘Material Adverse Change means a change in the business that has had a material and adverse effect on the operations, financial condition, or results of the Business; provided that the following shall NOT constitute a Material Adverse Change: (i) changes in general economic or market conditions; (ii) changes affecting the broader industry; (iii) changes in laws or regulations; (iv) ordinary course fluctuations in operations; (v) any action taken by Seller at Buyer’s direction; (vi) any failure to meet financial projections so long as the underlying business is operating in the ordinary course.’

Trap 7: post-close obligations not specified. Buyer language: ‘Seller will provide reasonable transition assistance.’ Open-ended commitment of seller’s post-close time. Seller revision: ‘Seller shall provide transition assistance for 90 days post-close on a full-time basis, then 12 months post-close on a part-time basis (up to 10 hours per week, with no more than 5 hours required in any single week without mutual agreement). Compensation: $X per month for full-time period, $Y per month for part-time period. Termination: either party may terminate consulting at any time after Month 6.’

How LOI mechanics differ by buyer archetype

Each buyer archetype has specific LOI conventions and pitfalls. Understanding the archetype-specific patterns helps sellers negotiate appropriate terms for the specific deal type.

SBA-financed individual buyer LOIs. Specific lender name required (Live Oak, Newtek, Byline, Celtic, Huntington). Lender pre-qualification letter as exhibit. SBA loan timing: 60-90 day commitment timeline typical. Personal guarantee from buyer (SBA requirement). Life insurance assignment commonly required. Seller financing component (15-30% typical) with subordination to SBA. Earnouts uncommon at this size; seller note + SBA + buyer equity is standard structure. Exclusivity: 30-60 days typical.

Search funder LOIs. Investor approval contingency (typical: 30-day investor vote period after LOI signing). Search fund close confirmation. Acquisition equity from search investors documented. Senior debt source named (often SBA 7(a) or specialty senior lender like Twin Brook, Antares, Churchill). Operator-as-CEO post-close commitment (the searcher will run the business). Some rollover equity to seller commonly requested (10-25%). Exclusivity: 60-90 days due to investor approval and senior debt close.

Independent sponsor LOIs. Capital raise contingency (typical: 45-60 day capital commitment timeline). Capital partners named or category-described. Fee economics specified (independent sponsor management fee, carried interest structure). Rollover equity often required (10-25% typical). Senior debt source named. Exclusivity: 75-120 days due to deal-by-deal capital raise. Higher break-up fee or deposit common to compensate seller for longer exclusivity.

PE platform LOIs. Fund vintage and uncalled commitment confirmed. Senior debt source (Twin Brook, Antares, Churchill, Ares, Golub) often pre-arranged. QoE provider named. Investment committee approval contingency (specific timeline). Rollover equity typical (15-30% for sellers continuing in management roles). Reps and warranties insurance typical for $5M+ EV deals. Earnouts moderate (10-20% of purchase price max). Exclusivity: 60-90 days. PE platforms have most professional LOI processes — specifications are usually clean but seller still needs to verify exclusivity termination triggers and walk protections.

Strategic acquirer LOIs. Source of funds (balance sheet, undrawn revolver, parent guarantee) confirmed. Board approval contingency. HSR filing requirements (if deal exceeds threshold) and regulatory approval timeline. Synergy-related earnouts more common (rare in financial deals, common when synergies are uncertain). Reps and warranties insurance for $10M+ deals. Public-company strategic LOIs subject to additional disclosure requirements (8-K filings if material). Exclusivity: 75-120 days due to longer diligence and board approval timelines. Earnouts may be longer due to synergy capture timelines.

Family office LOIs. Investment committee approval contingency. Capital deployment confirmation. Senior debt typically not required (family offices often deploy 100% equity for sub-$25M EV deals). Hold period thinking sometimes longer than PE (5-15 years vs 3-7 for PE). Rollover equity sometimes required for management continuity. Exclusivity: 60-90 days. Family offices have variable LOI sophistication — some are highly structured, some are informal — sellers should not assume family office means casual or assume institutional means professional.

The LOI drafting and negotiation process

Who drafts the LOI. Convention: buyer’s counsel drafts. This favors the buyer because the drafter sets the framing and has to be persuaded out of preferred language. Counter-convention some sellers use: seller’s counsel drafts a ‘term sheet’ that becomes the LOI basis. Seller-drafted term sheets are increasingly common in LMM transactions because the seller’s leverage justifies setting the framing. Either way, sellers should engage M&A counsel before LOI drafting begins (not after the buyer sends a draft).

Timing of LOI drafting. After indication of interest (IOI) is received and the seller has selected the preferred buyer or short list. Drafting typically takes 5-10 business days. Negotiation 5-15 business days. Total LOI process: 10-25 business days from IOI receipt to signed LOI. Compressing this timeline reduces seller leverage; expanding it gives the buyer time to find reasons to walk.

Engaging M&A counsel. Engage counsel with specific LMM M&A experience. Examples of well-known LMM M&A counsel firms: Goodwin Procter, K&L Gates, McGuireWoods, Greenberg Traurig, Bryan Cave Leighton Paisner, Holland & Knight, Reed Smith, Ballard Spahr. Regional firms with M&A practices often have lower hourly rates and equivalent capability for sub-$25M deals. Counsel cost for LOI through close: typically $50-200K for $5-25M EV deals. Specific LOI negotiation cost: $15-50K of total.

What seller’s counsel actually does on the LOI. Reviews buyer’s draft (or drafts seller’s term sheet). Identifies asymmetric provisions and common traps. Drafts seller revisions with specific protective language. Manages the back-and-forth with buyer’s counsel. Negotiates specific provisions where the seller has identified leverage points. Coordinates with seller’s tax counsel on structure. Reviews exclusivity termination triggers. Confirms financing contingencies are specific and enforceable. Reviews working capital methodology. Reviews escrow and indemnification framework.

What seller does themselves on the LOI. Decides on price (informed by counsel and market data). Decides on structure preferences (cash vs equity, asset vs stock, rollover yes/no). Decides on transition commitment (full-time vs part-time, duration). Decides on competitive dynamics (run multiple LOIs in parallel? Single LOI?). Reviews counsel’s drafts and negotiation positions. Approves final terms. Signs. The seller’s strategic decisions can’t be delegated to counsel; counsel’s role is to execute the seller’s decisions through specific protective language.

When to walk from the LOI process. Buyer refuses to specify lender (financing contingency unenforceable). Buyer refuses to specify exclusivity termination triggers (seller has no protection during exclusivity). Buyer refuses to specify working capital methodology (large dollar exposure). Buyer significantly modifies price from IOI without justification (signals re-trade behavior). Buyer’s counsel is unresponsive or unprofessional (signals execution problems). Each of these is a warning. Walking from a deal at LOI stage costs the seller weeks; walking from a deal at post-LOI exclusivity stage costs months.

After the LOI: how to enforce what was negotiated

Signing the LOI is necessary but not sufficient — the LOI provisions only matter if they’re actually enforced during the post-LOI period. Sellers who treat the LOI as a finish-line document instead of a starting-line document for the next phase often see their LOI protections erode during diligence as buyer pushes on specific terms.

Track exclusivity timing. From LOI signing, count the days. At Day 14 (financing application due): confirm buyer has applied with specific lender. At Day 30: confirm diligence is on track and on scope. At Day 45: confirm financing commitment is on track. At Day 60: confirm close is achievable on schedule. If any milestone slips materially, the seller has the option to invoke the auto-termination triggers from the LOI. Tracking is the seller’s job, not the buyer’s.

Enforce diligence scope. When buyer requests information beyond LOI scope, the seller’s counsel should respond: ‘The LOI defines diligence scope as [X]. The current request is outside that scope. Please confirm the request is consistent with the LOI or provide justification for scope expansion.’ This protects the seller from creeping diligence demands. Reasonable expansions can be granted; unreasonable expansions should be refused.

Maintain backup buyer relationships. During exclusivity, you can’t actively progress alternative deals but you can keep relationships warm. Periodic email contact with backup buyers (‘wanted to circle back — we’re currently in exclusive diligence with one party but expect to know more in 6-8 weeks; happy to revisit if circumstances change’) preserves the option of re-engaging if the primary deal collapses or re-trades. The buyer doesn’t see this; you’re not soliciting them, just maintaining contact.

Document buyer behavior. If the buyer engages in patterns suggesting re-trade (questioning previously-disclosed information, claiming financial surprises despite full disclosure, expanding diligence scope late in exclusivity), document the conduct in writing. Email summaries of conversations, written responses to information requests, formal positioning on disputes. Documentation serves two purposes: enforcing LOI terms in negotiation and creating a record if the deal collapses and seller needs to reset with a backup buyer.

Re-trade response strategy. When (not if) the buyer attempts to re-trade, the seller’s response is determined by leverage. Options: (1) Hold the line on LOI price, citing specific LOI language — usually wins back 30-50% of attempted re-trade. (2) Negotiate a smaller adjustment that addresses specific buyer concerns. (3) Concede on terms unrelated to price (longer transition, additional reps) in exchange for holding the price. (4) Walk and re-engage backup buyers. Cross-reference our re-trade response guide for the full framework.

Preparing for PSA negotiation. The PSA codifies what was agreed in the LOI. Seller’s counsel should drive the PSA back to LOI provisions on every disputed item: ‘The LOI specified [X]. The current PSA draft says [Y]. Please align with the LOI.’ Most disputes during PSA negotiation are buyer’s counsel attempting to expand provisions beyond what was agreed at LOI; seller’s counsel’s job is to drive back to LOI. The more specific the LOI, the easier the PSA.

Conclusion

The Letter of Intent is the seller’s peak leverage moment in any business sale. Before signing, the buyer is competing for the deal and willing to commit to favorable terms; after signing, leverage shifts decisively to the buyer through the exclusivity period. Eight terms must be specific in the LOI — price + adjustment methodology, exclusivity duration with termination triggers, diligence period scope and timeline, financing contingency with named lenders, conditions to close, working capital target methodology, escrow and indemnification framework, and seller-side walk triggers. Vague language on any of these creates buyer flexibility to re-trade during diligence at the seller’s expense — with $100K-$1M+ of value at stake on each undefined provision. Common buyer LOI traps (price ranges, open-ended exclusivity, customary diligence without scope, financing contingencies without lender names, working capital without methodology, MAC without exclusions, post-close obligations unspecified) follow recognizable patterns and have specific seller-protective revisions. Different buyer archetypes (SBA buyers, search funders, independent sponsors, PE platforms, strategic acquirers, family offices) bring different LOI conventions and pitfalls; understanding the archetype helps the seller negotiate appropriate terms. Engaging M&A counsel before LOI drafting begins (not after the buyer sends a draft) is the single highest-leverage investment of legal fees in the entire sale process. Sellers who lock in specifics at LOI walk into the PSA negotiation defending what was already won; sellers who treat the LOI as preliminary spend the post-LOI period defending less-favorable interpretations of vague language. The LOI process takes 10-25 business days from IOI to signing; the exclusivity period takes 30-90 days from signing to close. Both phases require active seller management of buyer behavior, milestone tracking, backup buyer relationship maintenance, and re-trade response readiness. The sellers who get the best outcomes negotiate hard on the LOI itself, then are flexible during diligence on items not specified in the LOI — the inverse of the common seller pattern. And if you want to talk to someone who knows the LOI mechanics across all buyer archetypes and can review your draft before you sign, we’re a buy-side partner — the buyers pay us, not you, no contract required. For a deeper look, see our guide on purchase agreement or letter of intent which is right for you. For a deeper look, see our guide on letter of intent purchase business pdf template.

Frequently Asked Questions

What’s the most important thing in a business sale LOI?

Specificity. Every term that affects deal economics — price, adjustments, exclusivity, financing contingencies, working capital methodology, walk triggers — must be specific. Vague language (‘subject to standard adjustments,’ ‘customary diligence,’ ‘mutually acceptable structure’) gives buyers flexibility to re-trade during diligence at the seller’s expense. The LOI is the seller’s peak leverage moment; vague terms surrender that leverage.

How long should the exclusivity period be?

30-45 days for sub-$5M EV deals. 45-60 days for $5-10M EV. 60-75 days for $10-25M EV. 75-90 days for $25M+ EV. Anything longer than 90 days is a red flag — either unusual deal complexity or buyer slow-rolling. Always include automatic termination triggers if buyer fails to deliver financing commitment, materially modifies LOI terms, or breaches the LOI.

How specific should the financing contingency be?

Very specific. Name the lender (Live Oak Bank for SBA 7(a), Twin Brook Capital Partners for senior debt, etc.). Require pre-qualification letter or term sheet as exhibit. Require commitment letter within 60-75 days of LOI signing. Define financing failure (denial in writing, materially worse terms than pre-qualification). Distinguish buyer-caused failure (forfeit deposit) from external failure (no penalty). Vague language like ‘subject to acceptable financing’ gives buyer license to walk for any reason.

What is working capital adjustment and why does it matter?

Buyer expects to receive normal operating working capital at close (AR + Inventory + Prepaid Expenses – AP – Accrued Liabilities, typically excluding cash and debt). The LOI sets a target; actual working capital at close is compared to target; difference adjusts purchase price. On a $5M revenue business, methodology can swing $250-750K. Specify in LOI: target methodology (trailing 12-month average typical), items included/excluded, dispute resolution mechanism. Without methodology, buyer claims unfavorable methodology during close.

What are common buyer LOI traps?

Seven main traps: price ranges instead of specific numbers; open-ended exclusivity without termination triggers; customary diligence without scope definition; financing contingency without named lender; working capital adjustment without methodology; MAC without exclusion carve-outs; post-close obligations not specified. Each trap costs sellers $100K-$1M+ in observed deals. Each has a specific seller-protective revision that converts the trap to balanced language.

Should I engage M&A counsel before signing the LOI?

Yes, before LOI drafting begins, not after the buyer sends a draft. The single highest-leverage legal investment in the entire sale process. M&A counsel cost for LOI through close: $50-200K for $5-25M EV deals. Specific LOI negotiation cost: $15-50K. Counsel reviews drafts, identifies traps, drafts protective language, and manages negotiation. Examples of LMM M&A firms: Goodwin Procter, K&L Gates, McGuireWoods, Greenberg Traurig, regional firms with M&A practices.

What walk triggers should I require in the LOI?

Three specific triggers: (1) buyer financing failure (specific lender doesn’t deliver commitment by stated date); (2) material LOI modification by buyer (price reduction beyond defined threshold, structural changes, scope expansion); (3) bad-faith buyer conduct (unauthorized customer/employee contact, public disclosure, breach of cooperation obligations). Each should auto-terminate exclusivity, allowing seller to engage alternatives without renegotiation.

How does the LOI differ for an SBA buyer vs a PE platform?

SBA buyer LOI: name specific SBA bank (Live Oak, Newtek, Byline, Celtic, Huntington), include pre-qualification letter, 60-90 day commitment timeline, personal guarantee, life insurance assignment, seller financing component (15-30%). PE platform LOI: fund vintage and uncalled commitment confirmed, named senior debt source (Twin Brook, Antares, Churchill), QoE provider named, IC approval contingency, rollover equity (15-30%), R&W insurance for $5M+ deals, 60-90 day exclusivity. Different conventions, different protections needed.

Should the LOI include earnout terms?

Only if part of the deal is earnout. Specify: total amount, measurement period (12-36 months), specific metrics (revenue or gross margin, NOT EBITDA — too easy to manipulate), measurement methodology, payment schedule, acceleration triggers (sale of business during earnout, change of control, material breach by buyer). Vague earnout language is the most expensive LOI trap; buyers can interpret payments in their favor for years post-close. If no earnout, explicitly state ‘no earnout or contingent consideration.’

What goes in escrow and for how long?

Escrow amount: 10-15% of purchase price typical, 5-10% with R&W insurance backstopping. Escrow period: 12-24 months for general indemnification, longer for specific tax / fundamental reps (3-6 years for fundamental, statute of limitations + 60-90 days for tax). Escrow agent: established escrow agent (Citizens Bank, JPMorgan, escrow specialty firms). Disputed claim handling: independent arbitration (typically AAA commercial rules). Cross-reference our R&W insurance and escrow guides for detailed mechanics.

What happens after the LOI is signed?

Exclusivity period begins. Buyer conducts diligence (financial QoE, legal, operational, tax, sometimes commercial). Seller manages diligence access and milestone tracking. Buyer secures financing commitments. Buyer’s counsel drafts PSA based on LOI framework. Negotiation between counsel of PSA-specific provisions. Pre-close conditions satisfied (regulatory approvals, third-party consents, etc.). Close: payment of purchase price, transfer of ownership, transition commencement. Most exclusivity periods take 30-90 days from signing to close depending on deal size and complexity.

How do I handle a buyer attempt to re-trade after LOI signing?

Common but defensible. Response options: (1) Hold the line on LOI price citing specific LOI language — usually wins back 30-50% of attempted re-trade. (2) Negotiate smaller adjustment addressing specific buyer concerns. (3) Concede on terms unrelated to price (longer transition, additional reps) in exchange for holding price. (4) Walk and re-engage backup buyers (only if you maintained backup relationships during exclusivity and buyer’s re-trade is unreasonable). The defense of LOI terms during re-trade attempts is the single biggest dollar-impact moment of the post-LOI process.

How is CT Acquisitions different from a sell-side broker or M&A advisor?

We’re a buy-side partner, not a sell-side broker or M&A advisor. Sell-side brokers represent you and charge you 8-12% of the deal (often $300K-$1M+) plus monthly retainers, run a 9-12 month auction process, and require 12-month exclusivity. We work directly with 76+ buyers — SBA-financed individuals, search funders, family offices, lower middle-market PE platforms, and strategic consolidators — who pay us when a deal closes. You pay nothing. No retainer, no exclusivity, no contract until a buyer is at the closing table. We can review your LOI before you sign because we know how the LOI mechanics work across all buyer archetypes — we’re inside the buyer-side processes daily. You walk after the discovery call with zero hooks.

Sources & References

All claims and figures in this analysis are sourced from the publicly available references below.

1. American Bar Association Mergers & Acquisitions Committee Resources — ABA M&A Committee resources on standard LOI structure, exclusivity period conventions, financing contingency drafting, and indemnification frameworks used in U.S. private company M&A transactions.
2. U.S. Small Business Administration 7(a) Loan Program — SBA guidance on 7(a) loan program mechanics including pre-qualification process, commitment timing, personal guarantee requirements, and life insurance assignment that drive SBA-buyer LOI conventions.
3. Internal Revenue Service Form 8594 Asset Acquisition Statement — IRS Form 8594 requirements for asset allocation in business acquisitions, the basis for LOI asset allocation methodology language and post-close tax allocation disputes between buyers and sellers.
4. Federal Trade Commission Hart-Scott-Rodino Antitrust Improvements Act — FTC HSR threshold guidance for 2024 ($119.5M) and annual adjustment process, relevant to LOI regulatory approval contingencies for larger LMM transactions and strategic acquirer deals.
5. Goodwin Procter LLP M&A Practice Resources — Goodwin Procter as a leading M&A counsel firm in U.S. lower middle-market transactions, with published resources on LOI drafting standards, escrow and indemnification frameworks, and rep and warranty insurance integration.
6. Live Oak Bank SBA 7(a) Lending Resources — Live Oak Bank as the largest SBA 7(a) lender by volume, providing pre-qualification process and commitment timing standards relevant to financing contingency specifications in SBA-buyer LOIs.
7. American Institute of Certified Public Accountants Business Valuation Standards — AICPA SSVS-1 standards governing Quality of Earnings methodology and working capital adjustment calculations referenced in LOI methodology specifications and post-LOI diligence framework.
8. Twin Brook Capital Partners Senior Debt Lending — Twin Brook Capital Partners as one of the largest senior debt lenders to U.S. lower middle-market PE platforms, illustrating the lender-naming specificity required in LOI financing contingencies for PE platform acquisitions.