01
What is a letter of intent?
Short answer
A letter of intent sets out the proposed price, structure and key terms before diligence. It is mostly non-binding, but once signed you usually stop talking to other buyers.
What to know
- Price is only one term; structure matters as much.
- Exclusivity often lasts 60 to 90 days.
- Terms rarely get better after signing.
What to do next
- 1Compare cash at close, not just headline price.
- 2Check the working capital target.
- 3Have an advisor review before you sign.
02
Should I take an earnout or cash up front?
Short answer
Cash at closing is certain. An earnout pays later only if targets are met, often after you no longer control the business. More cash up front usually means less risk for you.
What to know
- Earnouts can bridge a gap between what you want and what a buyer will pay.
- Targets and how they are measured matter a lot.
- Rollover equity is a different bet on the buyer’s success.
What to do next
- 1Model the deal at different outcomes.
- 2Negotiate clear, measurable targets.
- 3Weigh the certainty of cash.
03
I got an unsolicited offer. What should I do?
Short answer
Don’t say yes or no yet. Find out what your business is worth first, so you can judge the offer against your real number, not the buyer’s.
What to know
- First offers are often low and structured in the buyer’s favour.
- One offer is not a market; competition raises price.
- Keep it confidential while you assess it.
What to do next
- 1Thank them and ask for time.
- 2Get an independent view of value.
- 3Decide if you want to sell at all, then when.
Last reviewed September 2026 by the Horizon team. General information, not legal, tax or financial advice.
