When purchasing a business, getting on the same page with the seller is important. A detailed letter of intent helps you achieve this goal. Learn why it’s crucial.

When you decide to purchase a business, you must draft a letter of intent (LOI). While it's not a legal document, it represents a nonbinding agreement between you and the seller to enter into negotiations to buy a business. It specifies any tentative agreements that you verbally made with the business seller.

Gathering as much information as possible before buying a business helps you make an informed decision

It’s a good idea to gather as much information as possible about a business before you buy it to check if the company is viable. This data also makes it easier to secure a loan and can help you negotiate with the seller.

Performing an in-depth analysis is critical when acquiring a business. That's where due diligence accounting comes in.

When looking to invest in a merger or acquisition, you have two options for evaluating the target company's standing. You can rely solely on the target's audited records or go for due diligence accounting.

We see this happen all the time at Guardian Due Diligence. Self-funded searchers become enamored with the first deal they get serious with. It’s the kind of situation where everything feels right. The company is located in the right city. It’s the right price and right industry. You can’t wait to close this deal and move on with your life. Walking into due diligence and negotiation with this attitude can put you at disadvantage.

Your offer to buy a business should always be contingent on what the due diligence process uncovers

Purchasing a business is a stressful experience because there's always a risk. Even a seemingly successful company could have some skeletons in the closet that prevent its long-term success and leave you holding the bag.