Making an Offer and Writing the Letter of Intent

Your first offer isn't binding and neither is most of the letter of intent that follows it. Here's what belongs in each, and what actually changes before closing.

Published September 6, 2026 · Revised September 7, 2026

Once your early checks on a listing hold up, the next step is putting a number in writing. A first offer isn't a letter of intent (LOI) and it isn't binding, but a vague or unsupported one gets ignored just as fast as a vague inquiry does. Once the seller accepts your offer's broad terms, that agreement gets formalized into a signed LOI, the document that turns the negotiation into something that looks like a real deal.

What a first offer actually is

A first offer, sometimes called an indication of interest, is a short, informal statement of what you'd pay and on what basic terms, sent before either side commits to the time and cost of a formal LOI. It signals that you're ready to move from browsing to negotiating, but it doesn't lock you into anything. Either side can walk away from it without consequence.

What to include in your offer

A specific price, with your reasoning. State the number as a multiple of SDE, and say which SDE figure you're using (trailing 12 months, most recent full year, whatever the listing itself leads with). A number with no reasoning behind it reads as a guess.
The basic deal structure. Roughly how much would be cash at close versus a seller note or other deferred payment, even before the exact terms are worked out.
Your key contingencies. What still needs to check out before you'd move forward, like verifying the numbers or confirming a platform account transfers cleanly. Naming these upfront is more credible than staying silent and raising them later.
Your financing status. Whether you're prepared to close in cash, are pre-qualified for an SBA 7(a) loan, or are still lining up financing. This should already be consistent with what you said when you first reached out.
A proposed timeline. How quickly you could move to a signed LOI and into diligence if the seller accepts the broad terms.

Keep it to a page or less. The goal is a number the seller can actually evaluate, not a full contract.

How sellers and brokers evaluate your offer

A seller or broker is reading your offer for the same signal they were looking for when you first reached out: can this buyer actually close. A few things specifically move that judgment:

Whether the price is backed by a specific SDE figure and multiple, rather than a round number that doesn't map to anything in the listing.
How many contingencies you're attaching, and how open-ended they are. A handful of specific, named contingencies reads very differently from a vague "subject to my satisfaction with everything."
How quickly it arrived after you had the information you needed. A fast offer that reflects real homework on the listing outperforms both a rushed lowball and a slow, overly cautious one.

From offer to letter of intent

Once a seller accepts your offer's broad terms, or comes back with a counter you can live with, that agreement gets formalized into a signed letter of intent. That's the point where exclusivity kicks in, deeper diligence starts, and the terms you sketched out in your offer get written down in enough detail to actually guide the rest of the deal.

The LOI is typically 3 to 10 pages, and roughly 90% of it, the price, structure, and deal terms, is explicitly non-binding^[1]. It's a statement of intent and shared understanding, not an enforceable contract for those terms. A small handful of sections are the exception and usually do bind both parties from signature: confidentiality, exclusivity (also called a "no-shop" clause), and sometimes an agreement on who pays certain expenses if the deal falls apart.

That distinction matters in practice. You can walk away from the economic terms in an LOI if diligence changes the picture. You generally can't walk away from the exclusivity period and start shopping the deal to another seller, or start talking to the seller's competitors, without breaching the parts of the LOI that do bind you.

What a typical LOI actually contains

Purchase price and structure. The headline number, and whether the deal is structured as an asset purchase or an entity purchase, which matters for taxes, liabilities, and (for SBA-financed deals) how the loan gets underwritten.
Payment terms. The split between cash at closing, any seller note, and any earnout, along with the note's basic terms.
Diligence period. How long you have to investigate the business before you can walk away without penalty, commonly 30 to 60 days for a small to mid-size deal^[2].
Exclusivity period. How long the seller agrees not to shop the business to other buyers while you're in diligence, commonly 30 to 90 days^[2].
Key assumptions. Working capital targets, what's included in the sale (domain, code, customer list, social accounts, ad accounts), and any conditions the deal depends on, like a lender's approval.

How does the LOI process differ on Flippa and Empire Flippers?

It differs more than most generic LOI guides let on. If you're buying through a marketplace instead of an off-market broker, expect a shorter diligence window and a process built into the platform rather than a document you negotiate from scratch.

Flippa runs closest to the traditional model. Listings priced at $25,000 or more get a built-in LOI tool: you fill out a guided form (or upload a custom LOI as a PDF), the seller accepts or rejects it on-platform, and the due diligence period is a number of days you set directly in the tool^[3].
Empire Flippers doesn't run on a single negotiated LOI at all. You verify your identity and funds to unlock full listing details, then submit an offer. If your offer is below asking price, the seller can choose to "circulate" it: every other buyer who's unlocked that listing gets 24 hours to beat it by at least 10%^[4]. A full-price "Buy Now" offer skips circulation entirely. Only once your offer survives that stage do you pick an exclusive due diligence period, commonly 14 to 30 days^[5], shorter than what a broker-negotiated deal typically allows.

On both platforms, confidentiality and non-solicitation are still the pieces that actually bind you, same as with an off-market LOI. The difference on Empire Flippers is when exclusivity kicks in: it's not from the moment you submit an offer, it's only after that offer survives circulation.

What actually changes between signing and closing

Here's the part most LOI guides skip: it's common, not rare, for a real share of an LOI's terms to shift before closing. M&A attorneys who work on these deals routinely expect diligence findings to change some of an LOI's economic terms, price, working capital, or payment structure, even in deals that ultimately close successfully. There's no single published figure for how much typically moves, so treat any specific percentage you hear quoted as a rule of thumb, not a benchmark.

That's not a sign the process failed. It's the diligence period doing its job: the LOI reflects what both sides believed going in, and diligence is where you test those beliefs against actual data. A few things commonly move:

Price, when a QoE review or your own reconciliation turns up earnings that don't fully support the original number.
Working capital targets, once you actually see typical inventory or receivables levels rather than a rough estimate.
Payment structure, when a lender's final underwriting terms differ from what was assumed when the LOI was drafted.
Transition and non-compete terms, once both sides have had more conversations and think through specifics that weren't fully addressed in the original letter.

What this means for how you negotiate the LOI

Because the exclusivity and confidentiality provisions do bind you, and because the seller effectively takes the business off the market for you during that period, it's worth negotiating the LOI itself carefully rather than rushing to sign so diligence can start. At the same time, don't treat every number in it as locked in stone. The realistic expectation is a document that's directionally right and detailed enough to guide diligence, not one that's guaranteed to match the final purchase agreement line for line.

Next: once the LOI is signed, final due diligence is where you verify everything the numbers alone don't cover before you sign a purchase agreement.

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