How to Compare Multiple Letters of Intent
Before Signing Exclusivity (2026)

Why comparing LOIs is different from picking a price

When you have two or more written letters of intent (LOIs), compare their terms before granting one buyer exclusive negotiating rights. You can still ask both buyers to clarify their offers. An exclusivity clause may prevent you from continuing discussions with other buyers during the agreed period, depending on its wording. Our guide to letters of intent explains what an LOI typically covers.

A higher stated price may leave you with less cash at closing if the offer includes an earnout, which pays only if future targets are met, a seller note payable later, or rollover equity that keeps part of your proceeds invested. Price also tells you little about whether a buyer has financing in place or how much investigation remains before closing. Compare each offer’s payment structure and closing certainty alongside the buyer’s plans for your employees and your role after the sale. Those differences may matter more to you than the headline number.

Reconciling enterprise value to cash in your pocket

Start with the enterprise value stated in each letter of intent. Enterprise value is the buyer’s proposed value for the business before adjustments for debt and cash. A higher enterprise value does not necessarily produce a higher payment to you. For an explanation of how buyers arrive at that starting value, see our business pricing guide.

Next, calculate equity value, the amount attributed to your ownership after the agreed adjustments. Under a cash-free, debt-free offer, subtract debt and any separately defined debt-like obligations. Account for company cash under the offer’s terms. If you keep that cash, do not add it to the purchase price. If it transfers to the buyer and the agreement credits you for it, add that credit once.

Check that each liability appears only once in the calculation. For example, an obligation counted in the working capital adjustment should not also reduce the price as a debt-like item.

Working capital can change equity value again. Working capital generally means short-term operating assets, such as receivables and inventory, minus short-term operating liabilities, such as payables. The LOI should specify which items count. If the amount delivered at closing falls below the agreed target, the price may fall by the shortfall. If it exceeds the target, the price may rise. Compare each offer’s target and definitions, since the same business could receive different adjustments under different terms.

Finally, separate equity value from cash payable at closing. Rollover equity leaves part of your proceeds invested in the business, while a seller note pays later and carries repayment risk. An earnout depends on future performance. Escrow or holdback amounts may also arrive later, subject to the agreement’s conditions. Keep those amounts on separate lines rather than adding them to closing cash. Ask each buyer to show the full calculation in writing so you can compare what you would receive at closing with what you might receive afterward.

Worked example: comparing two hypothetical offers

Consider a hypothetical company with $14 million in annual revenue and $2 million in adjusted EBITDA. EBITDA means earnings before interest, taxes, depreciation, and amortization. Adjusted EBITDA is EBITDA with proposed changes, such as adding back certain owner-specific expenses. The buyer must agree to those changes for the figure to serve as a shared basis for the offer. In this hypothetical example, the owner receives two written offers. Both assume a $1 million working capital target, but the closing estimate is $800,000. The example assumes a $200,000 price reduction under both offers, no separate adjustment for company cash, and no other debt-like obligations.

Offer A has the higher enterprise value, but Offer B pays $1 million more cash at closing. In Offer A, the owner receives part of the equity value as a seller note and rollover equity rather than immediate cash. Offer B’s $9.8 million equity value plus its possible $2 million earnout gives it $11.8 million in total potential consideration before final closing adjustments, taxes, or fees. That figure includes the $500,000 escrow only if it is released and the full $2 million earnout only if its targets are met. Only its $9.3 million closing payment is shown as cash at closing; even that figure remains subject to final closing adjustments.

The $1 million of company debt comes out of each enterprise value once. If the buyer pays that lender directly at closing, you should not subtract the same debt again from the owner’s cash proceeds. The $200,000 working capital shortfall is a separate adjustment, and the final amount may change when closing accounts are settled. The cash figures also precede taxes and transaction fees.

The payment comparison still leaves financing and post-closing obligations to check. In this hypothetical, Offer A needs lender approval and asks the owner to stay for two years. Offer B shows available funds and proposes a six-month transition, but its earnout depends on future performance. You would still need to verify the funding and clarify each buyer’s employee plans before choosing one for exclusivity.

The offer-comparison worksheet

Before you compare the offers, write down what you want besides price. You might want key employees to stay, a short transition, or a limited role after closing. Then fill in both columns with facts from each LOI and any written follow-up. Mark anything the buyer has not addressed as “not stated.”

For financing, note what each buyer has provided, not just how the LOI describes payment. For diligence, list the reviews each buyer still needs to finish. Record the target each buyer expects the business to deliver at closing and how a shortfall or excess would change the price.

Ask each buyer to clarify missing terms before you agree to exclusivity. Use the worksheet to identify differences and unanswered questions, not to generate a numeric verdict. Weighted scores or risk haircuts can suggest more certainty than the written offers support.

Reading financing proof and diligence scope

Compare how each buyer will fund the purchase and what remains before closing, even if their prices match. Ask for financing evidence, required approvals, and a list of unfinished diligence. Those details show which parts of each offer still need to be confirmed.

For an offer from a strategic buyer, such as a company buying another business, ask how it will fund the purchase. An offer to pay you entirely in cash does not necessarily mean the buyer will use its own cash; ask for evidence of available funds or financing. Also ask who must approve the acquisition. A buyer may have the money but still need board approval before it can close.

For a private equity firm, which invests in companies on behalf of its fund’s investors, ask how much of the purchase price it expects to fund with its own equity and how much with debt. Ask how much equity its fund will contribute, whether the fund has available capital to invest, which lenders it expects to use, and how far those lenders have progressed. A lender introduction or an initial discussion does not establish a financing commitment. Ask which approvals and financing conditions remain open, even if the LOI describes the offer as fully funded.

Diligence can change a buyer’s willingness to close even when financing is available. Compare what each LOI leaves unresolved, such as a quality-of-earnings review of the company’s reported earnings and adjustments, customer contracts, or interviews with key managers. Ask each buyer to identify the work it still needs to do, who will do it, and what findings could change the price or terms. A proposed closing date carries less weight when the buyer has not explained how it will complete that work.

Weighing employee plans, your role, and what you want after closing

Your employee priorities should shape how you compare buyer plans, even when one letter of intent offers more cash. Ask each buyer which employees they expect to retain, who will make staffing decisions after closing, and whether they plan to change pay or benefits. A promise to “preserve the culture” tells you less than a specific plan for management, locations, and employee communication. If employee protections matter to you, ask your attorney which commitments can carry into the purchase agreement.

Your role after closing may differ sharply between offers. One buyer may request a three-month handoff, while another expects you to run the business for two years. If an earnout makes part of your payment depend on future performance, ask what authority you will retain over decisions that affect it. If the buyer asks you to keep an ownership stake through rollover equity, clarify when and how you may be able to sell it.

Return to the priorities you recorded on the offer-comparison worksheet. If you want to retire promptly, a short transition may carry more weight than a higher potential payout that requires years of involvement. Ask each buyer to clarify terms that matter to you before you choose exclusivity.

When to ask for best and final before choosing

A best-and-final request can help you compare final written terms when two credible buyers remain and material questions are still open. Each buyer can revise or confirm its offer before you choose one. Give each bidder the same request and deadline if the offers permit another round and you can manage the process without breaching an existing agreement. Ask for final economic terms, financing status, required approvals, remaining diligence, working capital assumptions, and proposed exclusivity. Carpenter Wellington’s guidance on final-round bids supports asking bidders to clarify financing and approvals alongside price. A revised private-company LOI still needs review. Requesting a final offer does not, by itself, make the offer’s proposed purchase terms binding.

You may not need another round if the offers already answer those questions and you know which buyer you prefer. Before asking for revisions, consider whether a credible buyer might hold its position or decline to continue. Ask for the information you need to decide, rather than requesting a higher price by default.

Keep each bidder’s terms confidential unless your attorney confirms you can share them. Before revealing another bidder’s identity, price, or deal structure, have counsel check each signed nondisclosure agreement. DLA Piper’s M&A nondisclosure agreement guidance explains that an agreement may protect the fact that a buyer is bidding as well as its proposed terms.

What counsel should review before you sign exclusivity

Have your transaction attorney identify which parts of the letter of intent bind you before you sign. A proposed purchase price may remain nonbinding even when exclusivity and confidentiality obligations take effect. Mintz’s guidance for sellers negotiating letters of intent explains why those provisions need separate review.

Ask counsel whether the no-shop clause prevents you from continuing talks with bidders who already submitted offers, responding to unsolicited inquiries, or sharing information during exclusivity. Ask whether any restriction on contacting earlier bidders continues after the exclusivity period ends.

Ask counsel to review confidentiality duties and any obligation to pay expenses. Counsel should also check when exclusivity begins, how long it lasts, and whether it can be extended or ended early. The wording and governing law affect what each provision requires. Salt Creek does not provide legal advice, and these questions do not replace your attorney’s review of the documents for your transaction.

FAQs

• Should I tell buyers they are competing? You can say you are considering other offers if that is true. Before sharing another buyer’s name or terms, ask counsel to check the confidentiality agreements you signed.
• What happens if I decline an LOI? An LOI you have not signed generally does not commit you to sell. Ask counsel to review any existing agreements, then give the buyer a clear answer. You may want to preserve the relationship if your preferred deal falls through.
• What if a buyer changes its price during diligence? Ask the buyer to explain the finding behind the change and show how it affects the proposed price. Compare that explanation with the LOI’s stated assumptions, then discuss your options with your advisor and counsel before agreeing to revised terms.
• Can I ask for more time to decide? Yes, but the buyer does not have to extend its offer. Request an extension in writing before the LOI expires, and confirm whether any proposed terms will change.

Getting a second opinion before you choose

Choose the buyer whose written terms and unresolved conditions you can accept, not simply the buyer with the highest stated price. Before signing exclusivity, confirm how those conditions could change your expected cash at closing and whether the buyer’s plans fit your priorities.

If you have two or more LOIs, speak confidentially with Jack and Connor at Salt Creek Advisory about the price, terms, and buyer fit before you commit to exclusivity.