Glossary

LOI — Letter of Intent

A non-binding agreement that sets the purchase price, structure, and diligence timeline before the formal purchase agreement. Also called a term sheet or memorandum of understanding (MOU).

What it is

An LOI is a written document signed by both buyer and seller that sets the principal terms of the deal before the parties spend significant money on legal documents and diligence. Most LOIs are non-binding except for specific clauses (exclusivity, confidentiality, expense responsibility) which are binding.

What to include

• Purchase price. Total consideration, broken into cash at close, seller financing, and any earnout.
• Deal structure. Asset purchase or entity purchase.
• Allocation of purchase price. How the price is allocated among assets (with tax consequences — review with a CPA).
• Closing timeline. Target close date and key milestones.
• Exclusivity period. The window during which the seller cannot negotiate with other buyers — typically 30–90 days.
• Diligence period. The window for the buyer to complete diligence — typically 30–60 days.
• What the seller will deliver during diligence. Financial statements, tax returns, contracts, leases, licenses, etc.
• Confidentiality. Reinforces the NDA signed earlier.
• Expense responsibility. Who pays for what if the deal doesn't close.
• Binding clauses. Explicitly identify which clauses are binding (typically exclusivity, confidentiality, expense responsibility) and which are non-binding (everything else).

LOI vs purchase agreement

The LOI is the framework; the purchase agreement (Asset Purchase Agreement or Equity Purchase Agreement) is the binding legal document that closes the deal. Don't try to make the LOI do the work of the purchase agreement — it's a term sheet, not a contract.

New York-specific notes

• SLA license transfer timeline. For liquor store and restaurant acquisitions, the NYS Liquor Authority (SLA) license transfer can take 4–6 months. Build this into your LOI's closing timeline — don't sign a 30-day diligence window if the SLA transfer will take 6 months.
• Bulk-sale notice timeline. The NYS Department of Taxation and Finance bulk-sale / successor-liability process has its own timeline. Build it into your LOI.
• Article 28 facility transfer. For medical practice acquisitions involving a NYS DOH Article 28 facility license, the transfer timeline can be 60–180+ days. Build it in.
• NYC lease assignment consent. NYC commercial leases typically require landlord consent to assign. Build landlord consent into your LOI as a contingency.

Where to go next

• How to buy a business in New York — full workflow
• Due diligence checklist
• NDA definition
• Quality of Earnings definition