Do you know who will read your letter of intent? Many assume that only the owner of the company you wish to purchase will read the LOI, but often there’s a wider audience.
While the owner is your top priority, there are other likely readers of the LOI you need to consider: the board of directors, the accountants (especially those involved in taxes), the management team, and other stakeholders. Even the owner’s spouse may impact the transaction significantly.
When I put together an LOI, I try to brainstorm the likely interests of every possible reader who might influence the seller’s decision-making. When you’re composing your LOI it’s important to remember the entire audience. After all, you won’t be able to accompany the document once you send it to the seller so it’s important to appropriately address the concerns of all parties involved.
As I’ve mentioned before, the LOI is an excellent marketing tool and you have the opportunity to differentiate your business from others by considering the needs, wants and desires of not only the owner, but also anyone else who may be involved in the transaction.
Because the LOI is a relatively formal document, you might assume that it needs to be written entirely in legalese. There’s no rule that requires this. In fact, the LOI gives you a golden opportunity to make your voice heard. A good place to do this is at the beginning of the document. Start the LOI not with legalese—the wherefores and therefores—but with a conversation.
Talk about the seller’s business and your business and why bringing them together makes good sense. Try to convey your excitement about the transaction and your strategic vision. You want the owner to hear your message loud and clear, along with the other people trying to influence the decision.