How to Reduce Risk in Closing Your Deal | The LOI

Sam Rosati and Kevin Henderson explore the legal work stream in small business acquisitions and how buyers can reduce deal risk from letter of intent through closing. The conversation addresses why so many deals fall apart after LOI despite strong financials, focusing on the specific legal provisions and negotiation tactics that either protect or jeopardize a transaction. Henderson emphasizes that friction, not just time, kills deals, and that clarity on contentious terms early in the process significantly improves closing rates. They discuss: Why working capital, indemnification caps, and seller note terms must be addressed in the LOI, not deferred to later negotiation How information asymmetry and broker incentives can push buyers to leave critical terms vague, creating costly problems post-LOI The binding power of exclusivity provisions and why most reimbursement clauses are difficult to enforce in practice Tactical approaches to document negotiation, including the value of issues lists and direct seller-buyer conversations outside of legal markups This episode on Main Street Deals offers practical guidance for searchers and small business buyers navigating the legal complexities of acquisitions without unnecessary costs or deal-breaking surprises. Topics: 00:00 - Intro 02:00 - Why legal issues kill deals after LOI 02:31 - Get specific on material issues early 04:30 - Why buyers leave terms vague in LOIs 08:14 - Competitive pressure and information gaps 10:46 - Minimum terms needed in an LOI 11:06 - Lock in purchase price and methodology 13:52 - Working capital methodology in the LOI 20:00 - Seller note structure and contingencies 23:04 - Working capital and customer deposits 25:10 - Asset deals versus equity deals 29:01 - Exclusivity provisions and duration 39:16 - Post-LOI tactics to improve closing odds 45:50 - Friction kills deals ______________________________________________________ SMB Law Group combines decades of experience with a modern approach to help small and medium business buyers, sellers, and searchers reach their legal and deal goals. Learn more: https://smblaw.group/ Connect: Eric Pacifici —   / eric-b-pacifici   Kevin Henderson —   / khendersonco   Sam Rosati —   / sam-rosati-68787a8