A letter of intent preparation checklist for a Canadian business purchase confirms a buyer has financing readiness, a firm price and structure position, and protective conditions — due diligence, financing, exclusivity and deposit terms — settled before an offer goes to the seller, rather than negotiated for the first time under pressure.
Reviewed
This checklist covers what a buyer should have settled before submitting a letter of intent on a Canadian small or medium business, distinct from how an LOI works mechanically or what happens in the window after one is signed. Most of the damage a weak letter of intent does happens before it is ever drafted, when a buyer decides on price and terms under time pressure instead of working them out calmly in advance.
Settle your own position first
Confirm financing pre-approval or documented proof of funds before naming a priceNaming a number you cannot actually back with financing puts a seller in the position of taking the business off the market for an offer that may not hold up.
Decide your walk-away price and the terms you will not move on before negotiations beginA limit set in the moment, in front of a motivated seller, tends to move; one set calmly beforehand tends to hold.
Choose a preference between an asset purchase and a share purchase before the first conversation about structureStructure affects price, tax outcome and what liabilities transfer, and arriving with no view on it leaves the seller’s side setting the frame for the whole negotiation.
Build in the conditions that protect you
Include a due diligence condition with a review period long enough to do a real jobA token period that looks reasonable on paper but leaves no time to chase down a genuine finding defeats the purpose of having the condition at all.
Include a financing condition unless your approval is already firm and in writingA letter with no financing condition, signed before financing is actually secured, can leave a buyer contractually exposed if a lender later declines.
Ask for an exclusivity period matched to what diligence will actually take, not a default number of daysToo short and you are rushed into decisions; too long with nothing offered in return, and a seller has little reason to agree to it in the first place.
Have a lawyer review the letter before you sign it, even though most of its terms are non-bindingThe confidentiality and exclusivity clauses inside a letter of intent are usually binding even when price and structure are not, and a lawyer catches that distinction before it matters.
Settle the terms that are easy to skip past
Confirm the deposit amount and exactly what happens to it if the deal does not proceedA deposit with no clear release mechanism becomes its own dispute on top of whatever caused the deal to fall apart.
State a target closing date and what happens if a condition takes longer to satisfy than plannedA date with no fallback plan invites a standoff later, exactly when both sides are least inclined to be flexible with each other.
Note which major assets, contracts or key employees the offer specifically assumes are includedA seller who later excludes something you assumed was part of the deal is a far smaller problem to fix now than after diligence is nearly finished.
Put confidentiality obligations in writing even though the letter as a whole is non-bindingA verbal understanding about confidentiality is hard to enforce if information leaks and either side wants to hold the other to something specific.
Avoid the mistakes that sink offers early
Do not make verbal promises about price or terms before anything is actually in writingA seller who has already heard a number informally can treat a lower written offer as a retreat, even when the written offer was always the real one.
Do not sign a letter with vague or missing conditions just to keep the process movingA weak letter of intent signed to preserve momentum tends to cost more time later, once a missing condition turns into a dispute during diligence.
Deavo is an advertising and listings platform, not a brokerage, law firm or valuation firm. This page is general information, not legal, tax, accounting or valuation advice, and rules differ by province. Confirm anything you rely on with a qualified professional before you act on it.