Free LOI template and letter of intent generator for buying a business or a building

LOI template for buying a business

A letter to buy a business turns on four choices: what you are buying, how the price is paid, what the seller keeps, and how long they stay to hand over. The generator writes each one. Here is what each choice does to the deal.

Asset purchase or share purchase

In an asset purchase the buyer takes only the assets and liabilities it names and agrees to assume. In a share purchase (a stock purchase in the US) the buyer takes the whole company, with every asset, right and liability, the unknown ones included. Contracts usually stay in place on a share purchase, while an asset purchase often needs the other side's consent, because most contracts restrict assignment. The tax result differs too: an asset buyer gets a cost basis in what it buys.⁸

Buying a business in Canada

The federal Canada Small Business Financing Program can finance the purchase of an existing business's eligible assets, up to $1.15 million per borrower in total. It cannot finance a share purchase. If that loan is part of your plan, write an asset purchase and pick the program in the generator's debt field. Ontario's law on binding letters is on the Toronto and Ottawa pages.¹⁹

Working capital

Buyers often require the business to deliver a normal level of working capital at closing, with the details worked out in the purchase agreement. The draft says exactly that, so the price you write is the price of a business that can pay its bills on day one. Expect the number to move: the final price almost always comes down between signing and closing.⁴

Seller note

A seller note is the seller lending you part of the price, repaid over time behind the senior lender. It is commonly 10 to 30% of the price in lower-middle-market deals. The draft writes the amount, the term and the rate, and lets the note be subordinated on the terms your lender requires.²⁰

Earn-out

An earn-out is part of the price paid later, only if the business hits targets you agree. Make those terms as clear as you can: vague earn-out definitions are what create disputes. The draft names the amount and the months it runs, and leaves the targets to the purchase agreement.^{4, 20}

Rollover equity

Rollover is the seller keeping a stake in the new owner instead of taking all cash. In a $10 million example on our capital markets episode, a $1 million seller note and $3 million of rollover put $4 million into the stack before anyone raised a dollar. Rollover can also change shape late: on Cody Sechelski's $2,660,000 HVAC acquisition, the lender's compliance rules ruled out the seller on the closing-day cap table three weeks before the wire, so the rollover became a convertible seller note and the wire left on June 29, 2026.^{21, 22}

Transition and financing

Every business draft asks the seller for reasonable transition support after closing, with the scope set in the purchase agreement. The financing section names your debt (a bank loan, an SBA loan or a Canada Small Business Financing Program loan) and, if you keep it, a financing condition with a deadline counted from the signed purchase agreement.

Ontario law and financing: Toronto LOI template and Ottawa LOI template.

LOI template for a commercial building

A letter to buy a building is about the property's paper as much as its price: title, leases, the rent roll and the deposit. Every commercial real estate LOI should at least name the parties, describe the property, and state the price, any earnest money deposit, the due diligence period and the closing date.¹⁰

Deposit and escrow

Name the earnest money deposit and who holds it in escrow. Both sit on the list of terms a letter needs before a court has anything to enforce. The generator writes an optional deposit, paid when the purchase agreement is signed, held in trust, credited at closing and returned if a condition in the buyer's favour fails.⁹

Due diligence clock

Say when the clock starts. Many letters give a 30-day due diligence period without saying when it begins, and the right length depends on the asset. The draft starts the period on the day the seller signs and lists what the seller opens up: title, survey, environmental and building condition reports, leases, rent roll, operating statements and service contracts.¹⁰

Rent roll and estoppels

In multifamily deals a current, certified rent roll is a critical closing delivery, and buyers lose it at the letter stage by asking only for a rent roll. Tenant estoppel certificates test that rent roll from the other side: a buyer or lender usually asks each tenant to sign one confirming its lease, its rent and deposits, and whether either side is in default. The generator lists the leases and the rent roll in diligence. On a building with tenants, add a line asking for a certified rent roll and estoppels.^{10, 11}

Title, deed and closing costs

The draft makes clear title a closing condition and writes the customary closing adjustments for rents, deposits, property taxes and operating costs. The allocation of closing costs, the form of deed and the assignment of leases are fundamental terms too, so settle them in the purchase agreement at the latest.⁹

Financing a building

An SBA 504 loan can fund the purchase of a building or land your business will use, but not rental real estate held as an investment. A financing condition protects the deposit while the loan is approved, and the draft sets one with a deadline.²³

Transfer tax on a $1.5 million building

Worked out from each city's published rates, the same arithmetic as its city page, where every rate is sourced. Add it to the closing costs in the deal check.

Letter of intent example

Three letters. The first is the letter of intent a buyer actually used on a real acquisition that closed in 2026, copied word for word with the names, numbers and dates turned into blanks. The other two are complete sample letters written by the generator from fictional terms, so each reads exactly as your own draft will. None of them is legal advice.

The two generator samples use fictional names and terms. The closed-deal letter has every person, company, place, date and figure removed.

What goes in a letter of intent

The generator writes each of these, in this order. The ones marked binding are the customary carve-outs.

Binding and non-binding clauses

A letter of intent binds where it says it does, and sometimes where it does not. The title on the page never settles it. The wording and what the parties do next settle it.^{4, 5}

What usually binds

Confidentiality, exclusivity and the split of expenses are the sections parties normally make binding, and the letter should say plainly that it creates no obligation to complete the deal. Exclusivity only does its job if the letter states that it binds, and the non-binding paragraph should carve out the binding sections by name as the only ones with legal effect. The generator does both: you tick which sections bind, and its last section names them by number.^{4, 5}

How a letter becomes binding by accident

A preliminary document can bind if the parties' intent that it not bind is not explicit. Courts read the wording and the conduct. In Wallace v. Allen the Court of Appeal for Ontario held a letter of intent binding, relying in part on its reference to "this agreement" and on what the parties did after signing, such as starting work in the business and announcing the sale to staff.^{7, 1}

How to make an LOI binding

Write it the other way round. State that both parties intend to be bound, and settle every essential term in the letter: the property, the price, the earnest money and the escrow agent, the diligence documents, the financing, and the closing date and conditions. If the what, when, how and how much are still open, there is nothing for a judge to enforce. Most buyers want the opposite, a non-binding letter with a few binding sections, and that is what the generator writes.⁹

Backing out before the purchase agreement

A good letter states that either party can end negotiations at any time before the definitive agreement is signed. The generator's draft says so in writing and keeps the binding sections alive afterwards. In Canada, Bhasin v. Hrynew (2014 SCC 71) recognized a duty of honest performance in carrying out a contract, so perform the binding sections honestly. In New York, a Type II agreement can still let a party seek relief concerning the negotiations themselves.^{4, 12, 13}

The rule in each state and province we cover

LOI vs term sheet, IOI, MOU and PSA

Five documents get mixed up. The usual order is the IOI, then the LOI, then the purchase agreement; a term sheet or an MOU does the LOI's job in a different format or setting.

The name on the page does not settle it. Courts have sometimes ruled that LOIs, term sheets or MOUs were binding agreements, so read the wording, not the title.⁴

LOI vs PSA: sign the letter first

Tre Brown, Head of Capital Markets at Raises.com®, names a PSA before an LOI as the first mistake on our capital markets episode. A purchase and sale agreement can bind you to put six figures into escrow, in his example $150,000 within five to seven days, just to see the books. A letter of intent gives you a 40 to 50 day diligence period for free.²¹

LOI template in Word, PDF or Google Docs

Four ways out of the generator, all built in your browser from the letter on screen.

Word

Download Word builds a .docx file from the letter on screen, in Times New Roman, with every section numbered and the binding ones marked.

PDF

Print or save as PDF prints the letter alone, without the page around it. Pick Save as PDF in your browser's print window.

Google Docs

Upload the Word file to Google Drive and double-click it. Drive opens it in Google Docs, where you can edit it as it is or convert it.²⁴

Plain text

Copy text puts the whole letter on your clipboard, and Download .txt saves it as a text file for email or any editor.

How the generator works

1. 1

   Pick a business or a building

   The draft changes with it: a business gets an asset or share purchase, a working capital adjustment and transition support; a building gets title, leases, rent roll and the closing adjustments.

2. 2

   Type the price and how it is paid

   Cash at close is worked out for you: the price less the seller note, the earn-out and the rollover.

3. 3

   Set diligence, exclusivity, financing and closing

   Choose which sections bind on signing. The rest stays non-binding until the purchase agreement.

4. 4

   Copy, print or download

   Download a Word file or a text file, or print to PDF. Then have your own lawyer review it before it goes to the seller.

Letter of intent questions