I want to make an offer on a janitorial service company. I found some LOI templates on the Ole Google search, but was wondering if somebody had some experience in writing them? It will be my first. Any advice is greatly appreciated, thanks to all! Cheers
Business broker here.
If the broker or seller will allow it, I recommend negotiating the terms of the sale before writing a formal LOI. You can save yourself time and money this way.
Send an email that defines what you want with contingencies:
Hi John,
Based on the information you’ve shared with me so far, I’m prepared to offer $225,000 for the business including the box truck.
The payments would be $75,000 paid at closing and $150,000 paid over time. I’m thinking we schedule the note payments for 10 years at the current prime rate of 8.5%. Payments would be $1,860/mo. generating over $73,000 in addition interest for you. I would rather you receive this interest than the bank.
If you would prefer a larger down payment, I will need a business loan. The interest will be much higher. My offer would be $210,000 to offset the cost. With a business loan it may be possible for the full amount to be paid at closing if the bank permits it.
We will need to define a few other items too such as a brief training period and agreeable non-compete terms.
This offer is contingent upon a satisfactory due diligence investigation of the business, a successful transfer of the lease, and acquisition of the business loan if it applies.
Let me know what you think.