What happens between the LOI and closing?

A signed letter of intent feels like the deal is done, but it is really a promise by both sides to try to get to closing on the terms agreed. What happens in between is where the deal actually gets built, tested and sometimes broken.

Exclusivity locks in the runway

Most LOIs include an exclusivity, or no-shop, clause that stops the seller from negotiating with other buyers for a set period while this deal is worked toward closing. This is usually one of the few genuinely binding parts of the letter of intent, and it is what gives the buyer confidence to spend real money on lawyers and accountants.

Due diligence and drafting run at the same time

While the buyer’s advisors verify the seller’s financial statements, contracts and liabilities, lawyers on both sides are usually already drafting the definitive purchase agreement in the background, rather than waiting for diligence to finish before starting. Findings from diligence regularly change the disclosure schedules attached to that agreement as they come in.

Conditions get satisfied one by one

The purchase agreement typically lists closing conditions that still need to be met: financing approval from a lender, consent from a landlord to assign the lease, transfer of a required licence, or a key employee agreeing to stay on. Each one is tracked separately, and closing does not happen until they are satisfied or the party they protect agrees to waive them.

The deposit changes the stakes

Signing the definitive purchase agreement is often when a buyer puts down a deposit, usually held by a lawyer or an escrow agent and applied to the purchase price at closing. This is the point where the deal shifts from a set of intentions to something with real money attached if either side does not follow through.

A deal can still fall apart here

This window is where financing conditions fail, diligence turns up a real problem, or a third-party consent takes longer than expected, and any of those can still end the deal even after a signed LOI. Treat the period between LOI and closing as active work, not a waiting room.