The point of an LOI template reference is to make the buyer's draft legible. Every LOI is a variation on the same ten-section scaffolding, with the same four binding provisions and the same six non-binding provisions. Sellers who can read the structure can spot when a clause has been narrowed, when a binding provision has been smuggled into a non-binding section, or when a commission-allocation rule has been omitted entirely.
§ 01 · The 10 standard sectionsWhat each one does.
Section 1 — Transaction Overview. Identifies parties, describes the proposed transaction as an asset purchase, establishes the LOI as non-binding except where explicitly stated. The non-binding framing is itself a load-bearing legal claim — every dispute about what the LOI commits comes back to this clause.
Section 2 — Purchase Price & Payment Terms. Total price, allocation between tangible and intangible assets, payment structure (cash, promissory note, earnout). Section 2(a) — the confidentiality of the LOI itself — is explicitly binding.
Section 3 — Assets Included. Defines scope: business records, supplies, phone numbers, goodwill, intangible assets, customer lists, expiration data. Explicitly states what transfers to the buyer.
Section 4 — Exclusivity / No-Shop. Explicitly binding. Seller agrees not to solicit or entertain other offers during the exclusivity period. Specifies duration and consequences of breach.
Section 5 — Due Diligence. Scope and timeline for buyer's investigation. Access to books, records, employees, clients, carriers. Conditions for satisfactory completion.
Section 6 — Conditions of Closing. All conditions that must be met before closing: regulatory approvals, carrier consent/cooperation, lease assignment, satisfactory legal review, employment-agreement execution, seller-representation accuracy.
Section 7 — Commission Allocation. Insurance-specific provision addressing how commissions earned between signing and closing are allocated. Typically includes the effective-date or receipt-date rule.
Section 8 — Confidentiality. Explicitly binding. Mutual confidentiality obligations that survive deal failure.
Section 9 — Expenses. Explicitly binding. Each party bears its own costs unless otherwise agreed. May include break-up fee provisions.
Section 10 — General Provisions. Governing law, entire agreement, amendment, counterparts. Term / expiration of the LOI.
§ 02 · The four binding provisionsWhat survives even if the deal fails.
The template explicitly marks four provisions as binding. Section 2(a) — Confidentiality of the LOI itself. Section 4 — No-Shop / Exclusivity. Section 8 — Mutual Confidentiality. Section 9 — Expense Allocation.
Everything else expresses intent but is not legally enforceable. That is the binding/non-binding split. Sellers who don't understand which sections survive deal failure end up surprised when the buyer walks away from a "binding" price commitment — because it wasn't binding to begin with.
§ 03 · The seven customization pointsThe dials worth thinking about before the attorney meeting.
Purchase Price Structure. Standard: Cash + Note + Earnout. The customization consideration: maximize cash-at-close percentage. In 2026 market conditions with declining senior-debt costs, the Return-of-Cash dynamic argues for 80–90% cash at close (per the cluster canonical).
Exclusivity Duration. Market standard is 45–60 days, with up to 90 in larger or carrier-dependent deals. The seller's target: the shortest defensible window — 30–45 days where deal complexity supports it.
Due Diligence Scope. Standard: broad access. Customization: define boundaries to prevent fishing expeditions. Specify what data categories are included and what timeline applies.
Commission Allocation. Standard: effective-date rule. Customization: clarify the method explicitly to avoid disputes. The cost of being unclear here is six-figure fights at closing.
Conditions of Closing. Standard: 6+ conditions. Customization: push for specificity on each condition. "Satisfactory diligence completion" without definition is a buyer-discretion phrase.
Break-Up Fee. Standard: optional. Customization consideration: protects seller if buyer walks after extensive diligence. Typically 2–5% of purchase price; more common in larger deals.
Employee Agreements. Standard: often a condition of closing. Customization: specify which employees and what terms. Vague language allows the buyer to use employee non-execution as a retrading trigger.
§ 04 · Where reference ends and attorney work beginsThe line not to cross.
The 10-section structure and seven customization points are scaffolding the seller can think through before the attorney meeting. The drafting itself — the precise contract language that turns "exclusivity should be 45 days with automatic expiration" into enforceable text — is attorney work. The point of this reference is to let the seller arrive at the attorney's office with a clear position on the seven dials, not to write the LOI.
Buyer-drafted LOIs are the start of a negotiation, not the end. The seller's attorney does the redlining; the seller's preparation determines what gets redlined and how aggressively.
Ten sections, four binding, seven dials. That is the scaffolding under every LOI a seller will see in agency M&A. Sellers who can name all three layers before reading the buyer's draft are negotiating from preparation. Sellers who can't are accepting a stranger's preferred starting position.
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Terminology on this shelf
- Asset Purchase
- Transaction structure where buyer acquires specific assets (not equity/stock).
- Expiration Data
- Policy renewal dates — a critical transferred asset in insurance M&A.
- Break-Up Fee
- Pre-agreed compensation if the deal fails after LOI execution.
- Binding Provisions
- Sections that survive deal failure — exclusivity, confidentiality, expense allocation, LOI confidentiality.
- Non-Binding Provisions
- Sections that express intent but are not legally enforceable — price, closing date, employment terms.