The letter of intent — LOI — is the document that signals a buyer is serious. It’s not the final purchase agreement. It’s not legally binding on most of its terms. But what it does bind you to, and what it communicates about how the deal will be structured, makes it one of the most important documents in the entire transaction.
Most landscape owners who receive an LOI for the first time don’t know what to look for. They focus on the number at the top and miss the clauses that determine what they actually walk away with.
What an LOI Is
A letter of intent is a non-binding summary of the key terms a buyer proposes for acquiring your business. It covers the purchase price, deal structure (asset sale vs. stock sale), payment terms (cash at close, seller financing, earnout), exclusivity, and timeline for due diligence and closing.
Most LOIs are 3–8 pages. They’re written by the buyer’s attorney, which means the language favors the buyer. Sellers who accept LOIs without legal review regularly find themselves in a deal structured worse than they understood when they signed.
An LOI isn’t a handshake. It’s a framework. The number is just the headline — the terms are the story.
What’s Typically in an LOI
What’s Binding and What Isn’t
This is where most sellers make their first mistake. The LOI is largely non-binding on price and terms — meaning the buyer can adjust both after due diligence. But the exclusivity clause is binding, which means once you sign, you can’t talk to other buyers for the specified period.
Exclusivity period and length. Confidentiality and non-disclosure. No-shop clause. Sometimes: earnest money or break-up fee terms.
Purchase price. Deal structure. Payment terms. Working capital target. Timeline. Earnout mechanics. These can all change after due diligence findings.
The practical implication: a buyer can submit an attractive LOI to get you under exclusivity, then reduce the price after due diligence based on issues they flag — real or manufactured. This is called a re-trade and it’s common. Sellers who haven’t prepared their financials carefully are most vulnerable to it.
What to Watch For in the Terms
Earnout provisions. An earnout defers part of the purchase price, making it contingent on the business hitting future revenue or profit targets after the sale. Earnouts often sound reasonable and pay out at below-average rates. Understand exactly what you’re agreeing to and who controls the inputs to that target after close.
Working capital adjustments. Most LOIs include a working capital target — the amount of cash and receivables (net of payables) that will be in the business at close. If you close with less than the target, the shortfall comes out of your purchase price. For seasonal businesses, this calculation can be significant and the timing of close matters enormously.
Non-compete scope. The non-compete clause keeps you from competing with the buyer post-sale. Make sure the geography is reasonable (not the entire country), the duration is negotiable (standard is 3–5 years), and the scope is defined. A poorly written non-compete can prevent you from doing anything in an adjacent business.
Seller financing. If a portion of the purchase price is structured as a seller note, you are the lender. If the buyer defaults, you have to sue to recover. Understand the interest rate, term, security, and what happens if the business underperforms post-close.
What to Do When You Receive an LOI
First: do not sign without legal counsel. Second: do not negotiate exclusively on price. Third: get a deal-experienced M&A attorney to review the language — not your general business attorney who handles your contracts, but someone who has closed landscape or service business transactions.
At GCG, Exit Readiness work includes preparing owners to read, evaluate, and respond to LOIs — so the first one you receive isn’t also the first one you’ve ever analyzed. Understanding deal structure before you’re in a deal is how prepared sellers negotiate better outcomes.
Frequently Asked Questions
What is a letter of intent (LOI) in a landscape company sale?
A letter of intent (LOI) in a landscape company sale is a non-binding document that establishes the key terms of a proposed transaction before the formal purchase agreement is drafted. It typically includes the purchase price, deal structure (asset vs. stock), working capital expectations, exclusivity period, and timeline. While most LOI terms are non-binding, the exclusivity provision — which prevents the seller from negotiating with other buyers during due diligence — is typically binding.
What does an LOI lock in for a landscape business seller?
The LOI establishes the framework that the formal purchase agreement will be built around. While most LOI terms are technically non-binding, deviating from them during due diligence damages trust and frequently kills deals. In practice, the price and structure established in the LOI are the deal — unless due diligence reveals material misrepresentations. Sellers who sign an LOI without fully understanding its terms often find themselves negotiating from a weaker position once exclusivity begins.
How long is an exclusivity period in a landscape company LOI?
Exclusivity periods in landscape company LOIs typically run 30 to 90 days, during which the seller cannot solicit or entertain offers from other buyers. During this window, the buyer conducts due diligence. Sellers should negotiate the shortest possible exclusivity period consistent with the buyer's legitimate due diligence needs, and ensure the LOI specifies what happens if the buyer does not close within the exclusivity window.
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