The LOI: Deciding if the Offer is Real
The LOI is a "Engagement Ring." It is a promise to buy, but they can still walk away. Focus on: Price, payment terms, and Exclusivity period.
What is No-Shop Clause?
No-Shop Clause is A clause that says you cannot talk to other buyers for 30-60 days while they do diligence.
The 3 Core Benefits
It sets the specific price
Before LOI, price is vague. LOI puts a number on paper. "$5M cash at close."
Validation
Someone likes your business enough to spend legal fees drafting an LOI. It validates your hard work.
Roadmap
It outlines the timeline. "Diligence for 30 days, Closing on May 1st." It gives you a schedule.
Negotiating the LOI
Price vs Terms
$10M over 5 years needs to be discounted. $8M cash today might be better. Terms matter as much as price.
Asset vs Stock Sale
Buyers prefer Asset Sale (buying just the code/users) to avoid your liabilities. Sellers prefer Stock Sale (QSBS tax).
Working Capital
Who keeps the cash in the bank account? Usually, it is "Debt Free, Cash Free" (You keep the cash). Clarify this.
Escrow / Holdback
They will hold 10% of the money in Escrow for 1 year to pay for any "breaches." Negotiate this % down.
Community Advice
Use the founders network on Mesh to check if the LOI is standard. "Is 20% holdback normal?" (Answer: No, it's high).
Signing Blindly vs. Negotiating
| Feature | Signing Blindly | Negotiating |
|---|---|---|
| Holdback | 20% | 10% |
| Exclusivity | 90 Days | 30 Days |
| Outcome | Trapped | Liquid |
Frequently Asked Questions
Can I back out after LOI?
Yes. It is non-binding (except for Exclusivity/Confidentiality). But you will burn bridges.
Can they lower the price?
Yes. This is "Retrading." If they do it without a valid reason found in diligence, walk away.
Do I need a lawyer for LOI?
Ideally yes, but definitely for the final Purchase Agreement. For LOI, an advisor is often enough.
What makes a launch channel high intent?
High-intent channels have users actively searching for solutions, not just browsing a feed.
How many channels should I launch on?
Start with 3-5 strong channels, measure conversions, then expand to 10-12 over time.
How do I avoid launch fatigue?
Stagger your launches and reuse assets so each channel gets a focused push.
What should I measure after launch?
Track qualified signups, backlinks, and demo requests, not just raw traffic.
How does Mesh of Growth fit with other platforms?
Use Mesh for compounding reviews and backlinks while other platforms provide short-term spikes.
Ready to get instant traffic from trusted founders?
← Back to Home