1. Purpose of an LOI

• It ensures both parties agree on fundamental terms before proceeding with due diligence.
• It helps prevent misunderstandings and wasted time in negotiations.
• It provides clarity on the deal structure before drafting the final agreement.
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2. Key Elements of an LOI

A well-structured LOI typically includes:

 

• Purchase Price – The proposed amount for the website.
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• Payment Structure – Lump sum, installment, or escrow-based payments.
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• Due Diligence Period – Time frame for the buyer to review traffic, revenue, and assets.
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• Assets Included – Domains, website files, customer databases, social media, etc.
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• Exclusivity Clause – Prevents the seller from negotiating with other buyers for a specific period.
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• Confidentiality Agreement (NDA) – Ensures sensitive business information remains protected.
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• Closing Timeline – Expected timeframe to complete the transaction.
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3. LOI Process in a Website Sale

 

Step 1: Buyer Submits the LOI

 

• After initial discussions, the buyer prepares and submits an LOI to the seller.
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• The seller reviews the terms and negotiates any necessary changes.
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Step 2: Seller Accepts the LOI

 

• Once both parties agree, they sign the LOI, signaling a commitment to move forward.
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Step 3: Due Diligence Begins

 

• The buyer verifies the website’s financials, traffic, and legal compliance.
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• If issues arise, renegotiation or termination of the deal can occur.
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Step 4: Drafting the Final Purchase Agreement

 

• After successful due diligence, the buyer and seller draft the Asset Purchase Agreement (APA).
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• The APA finalizes all terms before the website transfer and payment.
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Step 5: Closing & Transfer

 

• The deal is completed, ownership is transferred, and the escrow service releases funds to the seller.

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Is an LOI Legally Binding?

Most LOIs are non-binding, meaning either party can walk away before signing the final purchase agreement. However, certain clauses, like confidentiality and exclusivity, can be legally enforceable.

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Benefits of Using an LOI

✅ Prevents Miscommunication – Ensures both parties understand deal expectations.

✅ Saves Time – Reduces the risk of wasted effort on deals that may not close.

✅ Enhances Buyer & Seller Trust – Builds confidence before finalizing a legally binding agreement.

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