I recently worked on a deal where the prospective seller over-strategized the letter of intent. The seller wanted my client to sign a non-binding LOI that contained about half of what should have been included in the letter. It was extremely frustrating and ultimately was a waste of time, because rather than acquiesce to the seller’s demands, my client walked away from the deal.
While the LOI was “non-binding” in every way (and the seller kept repeating that), that wasn’t reason enough for my client to proceed. Basically, my client didn’t want to push forward without knowing more terms. And I can’t blame him. Why start the acquisition process without sufficient knowledge of basic terms?
I assume the seller was either not that serious about selling or is trying to gauge a potential buyer’s interest, but either way you run the risk of alienating potential buyers.
Ryan RobertsPartner
Ryan Roberts is a startup and venture capital attorney and partner at Roberts Zimmerman PLLC with more than two decades of experience advising high‑growth startups and venture capital investors. He is the author of Acceleration: What All Entrepreneurs Must Know About Startup Law and StartupLawyer.com
