The day an owner signs a letter of intent usually feels like the finish line. It is closer to the opening bell. Here is the asymmetry most sellers discover too late: the number in the LOI does not bind the buyer, and the exclusivity clause does bind you.
What is actually in the document
The headline price, the structure, the earnout, the rollover: non-binding, every one of them, in nearly every LOI. They are a statement of current intent, contingent on diligence confirming what the buyer thinks they are buying.
The binding parts are the quiet ones. Exclusivity, typically 60 to 90 days, during which you cannot talk to other buyers. Confidentiality. Sometimes an expense provision. The seller hands over their leverage at signing; the buyer hands over a term sheet they can revise.
None of this makes buyers villains. It is how the process works, and sophisticated buyers use the structure exactly as designed.
The re-trade, mechanically
Once exclusivity starts, the buyer's diligence team goes to work, and their quality of earnings review rebuilds your EBITDA line by line. Add-backs without documentation get struck. Revenue that looked recurring gets reclassified. The customer concentration you described as loyalty gets described as risk.
Every finding arrives late in the window, when your other bidders have moved on, your team is exhausted, and the deal has emotional momentum. A $300K EBITDA adjustment at a 5x multiple is a $1.5M price reduction, delivered when saying no means starting over. That is the re-trade, and in unprepared companies a 10 to 15% cut from the LOI number is routine.
What actually protects the price
Numbers that survive diligence. The single biggest defense is walking in with EBITDA a QoE team cannot move: documented add-backs, clean revenue classification, working capital already normalized. This is most of what exit readiness means, and it is 12 to 18 months of unglamorous work.
Competition up to the signature. Price discovery happens before exclusivity, never after. Two credible bidders at the LOI stage change the buyer's arithmetic about how hard to re-trade, because a re-traded seller with options can walk.
A short, defined exclusivity. Forty-five to 60 days with milestones beats 90 days open-ended. If the buyer cannot finish diligence on a prepared company in 60 days, that itself is information.
Knowing your own adjustments first. Finding your problems before the buyer does converts surprises into disclosures. Disclosed issues get priced once; discovered issues get priced twice, once in dollars and once in trust.
The buyer will scrutinize about seven numbers before that LOI is ever drafted. We wrote them down, with the thresholds buyers actually apply, in the 7 Numbers Before an LOI checklist. Ten minutes with it now beats learning the list during someone else's diligence.