What Is a Letter of Intent (LOI) in Agency M&A?

A Letter of Intent (LOI) is a non-binding document that outlines the key terms of a proposed agency acquisition before formal due diligence begins. It signals serious buyer interest and establishes the framework for deal negotiations.

What an Agency LOI Typically Includes

• Purchase price and structure: Total price, upfront payment, earn-out component, and any seller financing
• Deal type: Asset purchase vs. stock/equity purchase
• Due diligence period: Usually 30–90 days for agencies
• Exclusivity (no-shop) clause: Prevents the seller from soliciting other offers during due diligence
• Key conditions: Financing contingencies, employee retention requirements, client contract assignments
• Transition terms: Expected founder involvement post-close
• Target closing date

Important for Agency Sellers to Know

While LOIs are generally non-binding on price and terms, the exclusivity clause is typically binding. This means once you sign an LOI, you cannot negotiate with other buyers for 30–90 days. Get the LOI terms as close to final as possible before signing — the buyer has less incentive to negotiate favorably once you're locked into exclusivity.

Related terms: Earn-Out, Asset Purchase vs. Stock Purchase, Quality of Earnings

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