Small Business Question: Non binding Letter of Intent
I'm in the process of potentially making an offer on a small business.  The selling real estate agent is asking that I enter a non binding letter of intent.  Having never done this before is this something I can handle myself or would you all recommend having a lawyer draw it up for me?  Thanks for your help!
[{"id": "csfbc6j", "text": "Depends on the underlying complexity of the deal. I would suggest that you might as well, since you'll probably need to get a lawyer anyway as part of the purchase, and so it might make sense to bundle as it were for cost and bring someone in early to make the actual contracting easier for time. ", "replies": [], "depth": 1}, {"id": "csfbsea", "text": "A non-binding letter of intent is a framework to work out the details of a deal. So you'd agree how much you are paying, when, define what exactly you are buying, how due diligence will work, etc. Then a lawyer can draft the actual purchase agreement, which will be legally binding document you both sign based on the terms you've already agreed on in the LOI.", "replies": [], "depth": 1}, {"id": "csfc55x", "text": "Why is a real estate agent involved in the sale of a business?  Is the business at issue that broker's real estate agency?  If not, then it sounds like NO ONE in this deal has a clue, and might even be a violation of the realtor's licensing rules.\n\nI understand that sale of a small business does not merit Wall Street investment bankers, but it sure as hell requires far more expertise than the sale of the real estate.  Talk to a CPA who does business valuation (NOT a real estate appraiser!) and get the CPA to refer you to the local experts you need.\n\nDo not send an LOI to anyone until your local experts tell you how to proceed.  By proceeding without the right professionals, you might save a few thousand dollars on the front end but you will lose 10x as much when you find yourself fighting the battles their advice would have avoided.\n\nSource:  years of experience helping fools \"fix\" the business deals they entered without adequate expertise or professional advice.", "replies": [{"id": "csfd7m4", "text": "Note that the agent is representing the other side, if he's inexperienced it could actually be to the buyer's advantage.\nThere are a very small percentage of RE agents who actually DO have expertise in selling businesses. I'd trust their experience, but not someone who is selling their 2nd or 3rd. \nI know in some states it is not required to have a license to represent someone in the sale of a business. Whether or not there should be is another point altogether.", "replies": [], "depth": 2}, {"id": "csfdpm8", "text": "Good point.  I typed incorrectly.  It was a small family business that the owners have retired.  They are not selling the business, but the land and building.  They are interested in keeping the business running under a new name, which I am interested in it as... but they are also putting the land on the real estate market as it is in a prime location.", "replies": [{"id": "csfe7f8", "text": "Okay, that makes more sense.  I generally advise against LOIs for real estate deals, as they are either a meaningless extra step -- or they will turn out to be binding after all.  If you want to make an offer, just put it in the form of a proposed purchase contract.", "replies": [{"id": "csfec0s", "text": "Thanks for the info, I was reading on the non binding agreements sometimes becoming binding which is frightening.  I'm just going to get a hold of a lawyer and go from there.  I'm guessing it wouldn't cost a whole heck of a lot to do either.", "replies": [{"id": "csffx2m", "text": "I would draw up a quick LOI.  It won't take you more than 15 min.  Just keep it short and simple.  This way you will know if you are on the same page as the seller before taking the time to write up an 'official' contract.  Save yourself the BS of going trough an attorney for now.\n\nThis is enragethehive\n\nI want to buy X for X\n\nMy terms are X\n\nShort and simple, but it allows you to get the dialogue going.", "replies": [], "depth": 5}, {"id": "csfyuip", "text": "AIR lease forms cost per print (not sure about price). Using a lawyer to write up a lease costs more money. LOI's are more cost effective because anyone can create one.\n\nThat said you could print out a draft AIR lease form and send it, it just says void all over it. You wouldn't be skipping a step though because they would still have to send it back and then get the final lease form from you.", "replies": [], "depth": 5}, {"id": "csg2r7u", "text": "Why are you wanting to do an LOI?  \n\nDo you have non standard terms?  \n\nFor a purchase we usually do them when you have odd things like pre planned extensions, zoning contingencies, rights to other parcels etc.  Pretty much no one wants to pay a lawyer to draft contracts for stuff that isn't even going to happen, so an LOI facilitates the discussion.  \n\nIf you are just flat our buying some land and a building though and there is nothing weird, tell the selling agent to draft your offer on the board forms how you want it, then have your attorney review, and be done.", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}, {"id": "csfhwtm", "text": "In some states the applicable licensing for business sale deals is a real estate license. In those states the person putting the deal together damn well better have a real estate license or they are breaking the law. Here in Florida they would be committing a felony.", "replies": [{"id": "csfjh69", "text": "Really?  How odd.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}]