Do You Need Your Lawyer's Help With the LOI?
Selfishly, I would say yes, you should definitely enlist your corporate counsel to help you prepare the LOI (buy-side), or at least review it (sell-side). Obviously. I don't do what you do (build and scale businesses), and you don't do what I do (cover you on the legal front).
Then again, lawyers are expensive. And, so the thinking goes, "it's just an LOI." You can get the lawyers involved LATER, right? This is prevalent thinking, especially on the sell-side. Plus... you can run the LOI through ChatGPT. What are you really even giving up? It depends on your lawyer. It depends on your Buyer. And it depends on your deal.
In truth, a number of my clients will email me a signed LOI as my first involvement in the deal. Some of my favorite clients do this, no less 🙆. I trust them, and the usual arrangement is that the Buyer is also agreeing to exclude the lawyers. Until "after the LOI is signed." Which is only half-true. The LOI is a template from a past deal, that the lawyers prepared for that deal, and still contains numerous points that Buyer's attorneys will drop into an LOI. So, a "no lawyer" LOI will have your mix of Buyer-friendly items like 1-way working capital adjustments, limited or no earn-out covenants, no mention of "Good Reason" protections for if Seller's senior executives get pushed out early, and long exclusivity clauses. And a template LOI will probably have legacy terms from Buyer's last deal that are inapplicable to this deal, like an outdated indemnity concept that was specific to the last Seller but is irrelevant (or harmful) to you.
I know, I know. Very self-serving for the lawyer to write this. Easy enough for me to say that you should at least let me spend an hour or two with the draft LOI, to issue spot, or run it through CoCounsel, or jump on a Zoom to give you some talking points for your negotiations. I mean, it's only the sale of your business. What's a million here, or a million there?
But, seriously, it's fair for you to talk to your lawyer upfront about timing and estimates. So that you're getting actual value. Yes, an LOI is largely non-binding, but it is also the case that parties become much less likely to re-trade an issue that was agreed in the LOI if they shook on it. A tight but thorough review of the LOI helps you avoid agreeing to things you weren't aware of, and gives you credibility in the negotiations to come.