Buy a Business: LOI vs Asset Purchase Agreement


Buy a Business: LOI vs Asset Purchase Agreement

First, let’s start with this:

This content is not intended to provide legal advice, but rather to offer general guidance and insight as you navigate the process of making an offer on a business.

Every transaction is different, and when in doubt, you should always consult with a qualified attorney or professional advisor before moving forward.

If you’re thinking about buying a business, one of the first questions you’ll face is:

“Do I submit a Letter of Intent… or go straight to a purchase agreement?”

Most online advice points to a Letter of Intent (LOI).

And in many cases, that’s a perfectly valid starting point.

But in Florida—especially within the Business Brokers of Florida (BBF)—there’s a different approach that many experienced buyers and sellers use:

Going directly to an Asset Purchase Agreement (APA)

Let’s break down what that means—and how to choose the right path.

What is a Letter of Intent (LOI)?

A Letter of Intent is a non-binding outline of a proposed deal.

It typically includes:

  • Purchase price
  • Basic deal structure
  • Financing assumptions
  • Timeline for due diligence

It’s designed to:

  • Show interest
  • Align expectations
  • Start the negotiation process

What is an Asset Purchase Agreement (APA)?

An Asset Purchase Agreement is a more complete and structured offer.

Instead of outlining the deal at a high level, it:

  • Defines the full purchase terms
  • Includes contingencies
  • Establishes timelines
  • Sets expectations for both buyer and seller

In Florida, this approach has been refined over 25+ years and used in thousands of real transactions.

Why Many Florida Buyers Use an APA Instead of an LOI

You Still Have Full Due Diligence Protection

You can review everything—financials, operations, contracts—and:

Walk away if the business doesn’t meet your expectations

Your Deposit is Protected

Earnest money is:

  • Held in escrow
  • Refundable during due diligence

You Get a More Serious Response from Sellers

A structured offer:

  • Signals commitment
  • Gets better cooperation
  • Often reduces competition from casual buyers

Fewer Surprises Later

Unlike an LOI, which often leads to renegotiation:

The APA addresses key deal terms upfront

Is the APA Too Rigid?

Not at all.

The agreement is:

  • Flexible
  • Customizable
  • Designed to be adapted to each deal

And once accepted:

Attorneys typically prepare additional documents to ensure everything is properly structured and balanced for both parties.

When Should You Use an LOI Instead?

An LOI may be more appropriate when:

  • The deal is larger or more complex
  • Multiple stakeholders are involved
  • You’re still early in evaluating the opportunity

When an APA Makes More Sense

An APA is often ideal when:

  • You’re serious about a specific opportunity
  • You want to move quickly
  • You want structure without sacrificing protection
  • You’re buying a small to mid-sized business

Bottom Line

This isn’t about one method being “better” than the other.

It’s about using the right tool for the situation.

The approach developed by the Business Brokers of Florida blends:

  • The flexibility of an LOI
  • The structure of a formal agreement
  • The protections buyers need
  • All in one step

CALL TO ACTION (HIGH CONVERSION)

Thinking About Buying a Business? Let’s Talk First.

Before you make an offer, it’s worth understanding:

  • What the business is really worth
  • How to structure your offer
  • What lenders and sellers will expect
  • And how to avoid costly mistakes

Start Here:

  • Buyer Intake & Deal Alerts:

https://bbms.biz/listings/bbf-883/buy-enter.asp

  • Browse SBA Pre-Qualified Businesses:

https://bizmls.com/listings/bbf-883/bus-lender.asp

  • Schedule a Confidential Conversation:

(Insert your calendar link here)