What should I look for in a letter of intent as the seller?

What you are agreeing to give up

Signing a letter of intent usually means granting the buyer exclusivity: a promise not to negotiate with, or actively solicit, other buyers for a set period. In exchange the buyer commits time and money to due diligence. The trade only works for you if the period is realistic and tied to the buyer actually moving the process forward, not open-ended while the buyer takes its time.

Push back on an exclusivity period longer than the diligence genuinely requires, and ask for your own right to end it if the buyer misses milestones or stops responding.

Price, structure and what is included

Settle as much as you reasonably can before signing: the price, how it will be paid, whether the deal is assets or shares, what is included and excluded, any working capital target, and the deposit terms. The structure question, assets or shares, affects your tax result more than almost anything else in the deal, so get preliminary tax advice before agreeing to it rather than after.

A vague letter of intent that leaves structure to be decided later often turns into a fight, once the buyer has invested in diligence and has more leverage.

Deposits, and what is actually binding

A deposit shows commitment and should be held in a lawyer's or broker's trust account, with the letter of intent stating clearly when it is refundable to the buyer and when, if ever, you can keep it. Whether a document binds in Ontario depends on what the parties intended and whether the essential terms are certain, not on its label; most letters of intent state the deal terms are non-binding but make confidentiality, exclusivity and cost provisions binding on purpose.

Read those binding clauses as carefully as the rest of the agreement, since for the length of the exclusivity period they are the whole contract.

Getting it reviewed before you sign

Buyers, and brokers using a standard form, draft letters of intent to move their own side of the deal forward. We review it for what actually binds you, whether the exclusivity period and conditions are fair, and whether anything agreed now will be hard to walk back once the purchase agreement is drafted. This is also the point to flag any issue you already know a buyer will find in diligence, since surfacing it yourself usually costs less than a buyer finding it later.