Startup Letter of Intent Builder & Template

Update: February 2023
Why Use the LOI Builder?
How the Acquire LOI Builder Works
Frequently Asked Questions

Update: February 2023

In April 2022, we brought you a Letter of Intent (LOI) Builder to simplify making an offer so you could spend more time negotiating the best deal. Today you can now draft complex deal structures with LOI Builder V2, including conditions like seller financing and holdbacks.

Our goal is to make the acquisition process fast, easy, and transparent. Version two of the LOI Builder will now account for 85-90% of all deals on-platform*, giving you the flexibility to make an offer – without going cross-eyed over legalese or legal fees – in as little as five minutes.

*A friendly reminder: We cannot be your personal attorney or any other type of professional advisor. Please seek the services of an attorney if you have any questions on the LOI or any other legal document. By providing the LOI Builder for you to use as a tool, Acquire.com does not and does not intend to form any sort of professional relationship or engagement with you.

Why Use the LOI Builder?

You might spend weeks finding your ideal startup, but if you’re slow to make an offer, another buyer might beat you to it. LOIs can be time-consuming and complex if you’ve never drafted one before. Not only do you want to detail your offer but also leave a good impression on the seller.

LOIs aren’t usually legally binding, but they can include legally-binding terms such as a mutual NDA or exclusivity (no-shop) clause. You might be anxious about drafting one or incurring the cost of a lawyer to draft it on your behalf, but now you don’t needn’t worry about either.

In just a few clicks, the LOI Builder drafts the legal wording for you (in as little as five minutes). You then save hours of drafting and potentially thousands of dollars in legal fees. And since the LOI Builder integrates with your workflow, you gain a clear audit trail of the deal

Clarity on both sides of the acquisition ensures smooth sailing to close. You might find better deal traction simply from using our LOI Builder than doing everything off-platform manually.

How the Acquire LOI Builder Works

The LOI Builder sits within your Acquire.com workflow. No switching between Word or Google Docs. Once a founder grants you access to their startup, create and send your LOI from within the startup’s listing or your requests page. It should take no longer than five minutes.

Our founder, Andrew, explains how it works in the video below. We’ve also included a description of each stage beneath the video. For full step-by-step instructions on how to use our LOI Builder, please read this article from our Helpdesk.

Please note: To use the LOI Builder, you must be at least a Premium buyer and the founder have granted you access to their startup’s private information.

Create your letter of intent (LOI) in just five minutes.

1. Once you’ve been granted access to the startup, click Make Offer.

The “Make Offer” button is available from the listing or your startup requests page.

2. On the next page, click Build an LOI.

Once you start building an LOI, you can leave at any time and the Builder will save your progress. You can continue building your LOI later by clicking Continue Offer from your requests page or the startup listing.

Draft an Letter of intent (loi) with the builder or upload your own.

3. Enter the purchase price (in USD) and payment terms.

The purchase price is the amount you’ll pay to acquire the startup. Please only enter amounts in USD. (If offering lower than the asking price, discuss with seller first.)

Then select whether to pay all cash at closing or to add additional payment terms upon closing such as a conditional holdback or seller financing.

the letter of intent builder supports most deal structures.

4. Choose additional payment terms (optional).

select any applicable payment terms to customize your loi.

Select seller financing if you want the seller to finance a portion of the purchase price that you’ll repay in installments over time. Click “Edit financing terms” to enter the repayment amount, duration, and interest (if any).

enter the seller financing details including amount, repayment plan, and any interest.

Select a conditional holdback* if you want to temporarily retain a portion of the purchase price in escrow to offset the risk of liabilities post-closing. Click “Edit financing terms” to enter the holdback amount, duration, and holdback conditions.

*Do not select a conditional holdback if you’re financing the acquisition with an SBA loan.

enter the holdback amount, period, and conditions to offset post-closing risk.

5. Choose closing conditions (optional).

Is the founder and/or their employees a competition risk? Consider adding a non-compete condition.
Is the founder or their employees going to help you transition post-closing? Add a transition services condition.
Want to add conditions not listed? Click Additional closing conditions to manually enter your own.

PROTECT YOUR ACQUISITION INTERESTS WITH ADDITIONAL CLOSING CONDITIONS.

6. Add any additional terms (optional)

You can change the governing law jurisdiction from the default state of Delaware to another of your choosing. You can also add a confidentiality clause if you and the founder have yet to sign a non-disclosure agreement (NDA).

We recommend adding a mutual nda to safeguard any information you share.

7. Enter escrow details

Your LOI should include an escrow provision to protect you and the founder from fraud. The LOI Builder will connect you with our trusted partner, Escrow.com, to safeguard your transaction. You also choose who pays the escrow fee (you, the founder, or both of you).

ALWAYS USE AN ESCROW SERVICE WHEN CLOSING TO PROTECT YOUR INTERESTS.

8. Review, sign, and send your LOI

Download your LOI and review it carefully. You can edit any part of your LOI by clicking on the relevant section in the summary. If you want to consult with counsel, consider hiring one of our recommended M&A attorneys here.

Once you’re happy, click Sign LOI to add your signature. Then, click Send LOI to forward your offer to the founder.

We save your progress through each stage of the LOI Builder so you can exit and return to it at any time.

Frequently Asked Questions

What is a letter of intent (LOI)?

A letter of intent (LOI) is a formal offer of acquisition and describes how much you’re offering the founder (the purchase price) and under what terms and conditions. The founder is under no obligation to accept your LOI, so consider it the start of negotiations. Once the founder accepts, however, you start the formal acquisition process, moving to due diligence and escrow.

Do I have to send an LOI before acquiring a startup?

Yes, to Acquire a startup on Acquire you must first send the founder an LOI they subsequently accept. Legally and transparently documenting each stage of the acquisition protects you, the founder, and the integrity of the Acquire platform.

Attempting to Acquire a startup without sending an LOI may constitute a breach of our Buyer and Seller Terms of Use or our general Terms of Use and result in you losing access to Acquire and the marketplace.

Is an LOI legally binding?

An LOI is doesn’t legally require you to go through with the proposed transaction. However, it may sometimes contain legally binding terms that help both sides complete the transaction like a mutual NDA or “no-shop” clause.

The LOI Builder automatically includes a “no-shop” clause (which you can remove if you want). This prevents the founder from speaking to or negotiating with other buyers once they’ve accepted your LOI. If you’re at all doubtful of your obligations under the LOI, please consult a legal professional.

Do I need my lawyer to review the LOI?

The LOI Builder drafts the legal wording according to the choices you make and information you enter at each step. As a result, you might not need a lawyer to review the wording if you understand and are comfortable with the terms and conditions. As always, please consult with an attorney if you have any questions.

What are non-compete and non-solicitation clauses?

When you acquire a startup, some of the founder’s employees might leave and start up a similar business and try to take your customers with them. Non-compete and non-solicitation clauses, in effect, prevent this from happening for a set period after the acquisition closes.

What happens if I make a mistake when building the LOI?

As long as you catch the error before sending the LOI, you can return to the step where you made the mistake and correct it. For mistakes made after sending the LOI, you’ll need to ask the founder to reject your LOI and then rebuild another one from the beginning.

What happens after I send the LOI?

Once sent, the founder will receive a notification to review your LOI. They might accept your LOI immediately and you’ll progress to the next stage of the acquisition. Or, they might reject your LOI and negotiate alternative terms. We suggest giving the founder at least three working days before chasing them for a response on your LOI.

Does the LOI Builder save progress?

Yes. You can exit the LOI Builder at any time and it’ll save your progress. To resume building your LOI, just return to the request or startup listing to continue.

Can I still draft an LOI manually?

Yes, you can still upload your own LOI and send it to founders. To draft and send your LOI manually, click Upload it now on the first page of the LOI Builder (pictured below).

ALREADY DRAFTED YOUR LOI? UPLOAD IT AND SEND THROUGH THE PLATFORM FOR AN INDELIBLE TRANSACTION RECORD.

Can I replace my manual LOI with one from the Builder?

If you’ve already sent an LOI to the founder manually, you can’t send one with the LOI Builder. The only exception is if you sent the LOI manually off-platform. In which case, so long as that manual LOI is no longer valid, you can create a new one using the LOI Builder.

How many LOIs can I send?

You can only send one LOI to a founder at a time. Once the founder accepts the LOI, you can’t send any others unless it’s subsequently rejected or canceled.

How do I add a condition not included in the builder?

Our LOI Builder is designed to be quick and easy and covers around 80% of startups currently listed on Acquire. However, if you’d like to add additional terms and conditions not currently listed in the LOI Builder, you’ll need to create and upload your LOI manually.

Today’s LOI Builder is just the start. Please let us know how to make the LOI Builder better for you in this form and we’ll do our best to include your suggestions in the next version. Thank you.

Can I use the LOI Builder for acquiring startups outside of Acquire?

The LOI Builder is exclusively for acquiring startups listed on Acquire. Each LOI is watermarked with our brand. Any use outside of Acquire may constitute a breach of our Buyer and Seller Terms of Use or our general Terms of Use and result in you losing access to Acquire and the marketplace.

What is escrow and do I need it?

Escrow is a trusted third-party service that manages the transfer of acquisition funds. Rather than rely on trust, you and the founder use an escrow service that ensures you both uphold your end of the transaction, protecting you both from fraud. Our chosen escrow partner, Escrow.com, will safely handle your transaction in the following way:

You and the founder sign an asset purchase agreement (or other purchase agreement).
You transfer acquisition funds to Escrow.com.
The founder will transfer you the assets described in the purchase agreement.
You review and approve the assets.
Escrow.com will release your funds to the founder.

Who pays the escrow fee?

You have the option to select who pays the escrow fee while building your LOI. The options are you, the founder, or both of you (a 50/50 split).

Why has the founder rejected my LOI?

The founder might reject your LOI for many reasons. Perhaps your offer was too low, the terms and conditions too restrictive, or they’ve changed their mind about selling. Usually, the rejection will come with a note from the seller explaining why they rejected your LOI (we always recommend they give a reason). If that’s missing, feel free to ask for their reasons via chat.

The content on this site is not intended to provide legal, financial or M&A advice. It is for information purposes only, and any links provided are for your convenience. Please seek the services of an M&A professional before entering into any M&A transaction. It is not Acquire’s intention to solicit or interfere with any established relationship you may have with any M&A professional.