{"id":15026,"date":"2022-02-24T17:00:28","date_gmt":"2022-02-24T16:00:28","guid":{"rendered":"https:\/\/www.best-value.be\/la-lettre-dintention\/"},"modified":"2025-07-11T09:59:11","modified_gmt":"2025-07-11T07:59:11","slug":"letter-of-intent","status":"publish","type":"post","link":"https:\/\/www.best-value.be\/en\/letter-of-intent\/","title":{"rendered":"Letter of Intent (LOI) = Sales Agreement?"},"content":{"rendered":"

Good news! Your business transfer advisor is reaching out to let you know that they have received a letter of intent \u2014 also known as an “LOI” \u2014 from a potential buyer. <\/strong>So, is the deal done? Not quite yet!<\/strong><\/p>\n

Although this letter of intent is a key milestone in the selling process, it does not<\/strong> constitute a definitive purchase agreement. Instead, it sets out in writing the buyer\u2019s intentions, with the ultimate goal of finalising the transaction. Often compared to a preliminary sales agreement in real estate, the LOI isn\u2019t quite the same thing. So, what exactly should you be paying attention to?<\/p>\n

The Letter of Intent: Binding or Non-Binding?<\/h3>\n

Under Belgian law, the principle of consensualism<\/strong> applies: an agreement on the object and the price is enough to conclude a sale. In real estate, for example, signing a preliminary agreement practically seals the deal. But in a business sale<\/strong>, the LOI typically marks the beginning<\/em> of the relationship with the buyer. The buyer usually wants to deepen their understanding of the company, often leading to new negotiations.<\/p>\n

That\u2019s why buyers tend to emphasise the non-binding<\/strong> nature of the LOI. It’s also important to identify the points still open for discussion, to avoid them being taken as settled. That said, suspensive conditions<\/strong> can be included, such as securing financing or completing due diligence. In short, how the LOI is worded can significantly impact the rest of the process.<\/p>\n

The Price \u2014 But Which Price?<\/h3>\n

In real estate, the price in the preliminary agreement is generally final. The property’s value remains stable between the preliminary and final acts.<\/p>\n

In a business transfer<\/strong>, however, the price proposed in the LOI is usually based on a partial analysis<\/strong> of the accounts and early information provided by the seller.<\/p>\n

And several months may pass before the final sale agreement is signed. Setting a fixed price in the LOI may seem reassuring, but it\u2019s a risky gamble \u2014 the company’s value may change over time.<\/p>\n

The buyer may therefore propose:<\/p>\n

    \n
  • \n

    a price adjustment mechanism<\/strong> using a formula, or<\/p>\n<\/li>\n

  • \n

    an earn-out<\/strong>, which links part of the price to the company\u2019s future performance.<\/p>\n<\/li>\n<\/ul>\n

    Hold Off on the Champagne<\/h3>\n

    As you can see, a letter of intent and a preliminary sales agreement don\u2019t have the same legal effects. Mentioning a final price in the LOI without clarifying its legal weight can lead to confusion.<\/p>\n

    Still, receiving an LOI is a strategic milestone<\/strong>. Being well-supported during its drafting or review helps lay a solid foundation for the next negotiation phase \u2014 and, ultimately, to turn that LOI into a definitive sale agreement. And only then<\/strong>… should you pop the champagne!<\/p>\n

    Anthony Henrion<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

    Good news! Your business transfer advisor is reaching out to let you know that they have received a letter of intent \u2014 also known as an “LOI” \u2014 from a potential buyer. So, is the deal done? Not quite yet! Although this letter of intent is a key milestone in the selling process, it does […]<\/p>\n","protected":false},"author":2,"featured_media":2365,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[74],"tags":[59],"class_list":["post-15026","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-did-you-know-that","tag-articles-en"],"acf":[],"yoast_head":"\nLetter of intent in M&A: what it really means and why it matters<\/title>\n<meta name=\"description\" content=\"The letter of intent is often compared to a real estate preliminary sales agreement. 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