How to Write a Letter of Intent (LOI) When Buying an Online Business

What Is a Letter of Intent — and Why Does It Matter?

A letter of intent — almost always called an LOI — is the document you send to a seller after you have decided you want to buy their business and before you commit to the full, expensive machinery of due diligence. Think of it as a handshake in writing: it says "I am serious, here is my number, here are my conditions, and for the next few weeks this deal belongs to the two of us." An LOI is almost always non-binding in its commercial terms — meaning neither party can be sued for not closing — but certain clauses inside it *are* legally binding. Exclusivity and confidentiality are the two you will see called out as binding in virtually every template. The rest (price, structure, timeline) are commitments of intention, not obligation.

That distinction matters enormously. Sellers use the LOI to decide whether to take the business off the market and grant you exclusive access. Buyers use it to lock in the price framework before they have spent weeks on diligence. Get it wrong and you waste months; get it right and you control the deal.

When to Submit an LOI

The timing question trips up first-time buyers more than anything else. Submit too early — before you have reviewed financials, traffic, and the seller's asking rationale — and your offer will look uninformed. Submit too late and you risk a competing buyer jumping in.

The right window is after your initial review but before full due diligence. In practice that means:

• You have reviewed the Confidential Information Memorandum (CIM) or the listing details.
• You have had at least one call with the seller.
• You understand the revenue model, the traffic sources, and any obvious risks.
• You have a rough sense of what the business is worth to you.

At that point, an LOI crystallises your intention and triggers the seller granting you exclusivity — which is when you do the deep, costly diligence work.

The 8 Sections Every LOI Needs

1. Purchase Price

State your headline number. Be specific: "USD 480,000" not "approximately USD 500,000." Vague pricing is the single most common LOI mistake and gives a seller an easy reason to walk. If you are offering a range pending diligence, frame it as "between USD X and USD Y, subject to verification of trailing twelve-month SDE."

2. Payment Structure

Cash at close is the cleanest, but most acquisitions involve some mix. Spell out:

• How much is paid at closing, and how much is deferred (seller financing, earnout or holdback).
• Whether there is a holdback — a portion of funds withheld for 30–90 days to cover representations that prove false (common on deals above USD 100K).
• Whether there is seller financing — the seller receives part of the purchase price in instalments over 12–36 months.

3. Earn-Out (If Any)

An earn-out ties part of the price to the business hitting future performance targets. It is most common when buyer and seller disagree on the trend line — the seller believes revenue is about to inflect upward, the buyer is sceptical. If you include one, define:

• The metric (net revenue, SDE, MRR).
• The period (usually 12–24 months post-close).
• The payout formula (e.g., "20% of purchase price if SDE exceeds trailing 12-month SDE by 15% or more").

Earn-outs add complexity. Use them to bridge a valuation gap, not to defer a pricing decision you have not actually made.

4. Exclusivity Period

This is one of the binding clauses. Request 30 to 45 days of exclusivity — enough time to complete diligence without creating an endless hold on the seller. Some sellers push back and offer 21 days; if you think diligence will take longer, negotiate here. Missing a hard deadline on exclusivity can restart the whole competitive dynamic.

5. Due Diligence Scope

Outline what you will be reviewing: financials (P&L, bank statements, ad spend), traffic (GA4, Search Console), customer contracts, technology (if SaaS), supplier agreements, any pending litigation. This section protects you: if the seller refuses to provide something listed here, you have written grounds to renegotiate the price or walk.

6. Timeline

Include target dates for:

• Exclusivity end date.
• Diligence completion.
• Signing of the Asset Purchase Agreement (APA).
• Closing and fund transfer.

A realistic timeline for a deal in the USD 100K–500K range on a marketplace like Flippa or Empire Flippers is 30–60 days from LOI to close.

7. Conditions Precedent

These are the gates you must pass before you are obligated to proceed. Common ones:

• Satisfactory completion of due diligence.
• No material adverse change in the business.
• Clean transfer of all key assets (domain, accounts, code repositories, social channels).
• Seller representations proving accurate.

8. Confidentiality

Another binding clause. Even if you signed an NDA before receiving the CIM, restating confidentiality in the LOI tightens the legal position for both parties.

How to Price Your Offer

Most online businesses trade on a multiple of SDE (Seller's Discretionary Earnings) or, for SaaS businesses, a multiple of ARR. What you see on aggregators like the ones browsable on Flipagora reflects market norms pretty clearly.

Rough 2026 benchmarks for self-operated online businesses:

Empire Flippers deals tend to sit toward the top of those ranges — they have a strict vetting process that commands a premium. Flippa listings cover a wider range, with some well-priced gems hidden among the noise.

When building your offer, start with trailing twelve-month (TTM) SDE, apply the appropriate multiple for the risk profile, then adjust down for concentration risk, trend (revenue declining? cut the multiple), traffic source risk (entirely Facebook ads? That is a risk), and any known technical debt.

Non-Binding vs. Binding: What's What

The non-binding label does not mean these terms are irrelevant. Sellers will hold you to the spirit of your LOI in negotiations, and walking away on price after exclusivity has run will sour the relationship permanently.

Common Mistakes to Avoid

Vague price formulation. "A price around 3× SDE" is not an LOI — it is a conversation starter. Specify the number. No exclusivity request. Without exclusivity, the seller can run a parallel process while you spend money on diligence. Always ask for it. Skipping representations. If you do not list what the seller is representing to be true (revenue, traffic, no pending lawsuits), you have no grounds to renegotiate if something turns out to be false. Overly long exclusivity. Asking for 90 days kills seller trust. If you need 90 days for diligence, break it into two phases and negotiate an extension option instead. No conditions precedent. Some buyers are so eager to look decisive that they omit the escape hatches. Do not do this. You need a clean way out if the books do not match the pitch. Forgetting the transition period. An LOI should reference a post-close transition — typically 30–90 days of seller support — so the handover is part of the deal from day one.

LOI Template Outline

A quick checklist of what your LOI document should cover, in order:

• Parties (buyer legal name, seller name, business name)
• Recitals (context: "Buyer has reviewed the CIM dated…")
• Purchase price (specific number or formula)
• Payment structure (cash at close / holdback / seller financing breakdown)
• Earn-out terms (if applicable)
• Assets included / excluded
• Liabilities assumed / excluded
• Exclusivity period (start date, end date, binding)
• Due diligence scope and access requirements
• Conditions precedent
• Timeline to APA and close
• Confidentiality restatement (binding)
• Governing law
• Signatures

Keep the whole document under three pages. An LOI is not the APA. Its job is to align on the deal's skeleton, not to resolve every legal detail.

Key Takeaways

• An LOI is your formal first bid — non-binding on price, binding on exclusivity and confidentiality.
• Submit after your initial review but before costly due diligence.
• Always include a specific price, a clear payment structure, and a defined exclusivity window.
• Use earn-outs to bridge genuine valuation disagreements, not to avoid pricing the deal.
• Reference TTM SDE multiples benchmarked against real deals to build a defensible offer.
• List conditions precedent — they are your escape hatches if the books do not check out.
• Keep the document short and focused. The APA handles the details.

Ready to put your LOI to work? Browse deals on Flipagora — Flippy has treasure from every corner of the internet waiting for a serious buyer.