Selling your ecommerce business to an aggregator may feel like an easy win, especially when the Letter of Intent (LOI) arrives quickly and with impressive numbers. But beneath the surface of these documents are legal and financial terms that can heavily impact your final payout.
While many sellers rush to sign, experienced founders pause to dissect what e commerce aggregators are really proposing. These hidden clauses can shape the outcome more than the headline valuation.
Understanding the Purpose of the LOI
A Letter of Intent is a non-binding agreement that outlines the buyer’s preliminary offer. While it’s not final, signing it often removes your business from the market, locking you into a period of exclusivity.
Why LOIs Matter More Than You Think
- They set expectations for deal structure
- LOIs can contain binding clauses despite being “non-binding” overall
- Buyers use them to shape due diligence in their favor
- They often reflect the aggregator’s standard deal-making strategy
Key Economic Terms That May Be Misleading
Many sellers focus on the topline number, but the real value is hidden in the fine print.
Watch These Deal Elements Closely
- Earn-outs: A portion of the purchase price tied to future performance. If poorly defined, you may never see this money
- Holdbacks: Amounts withheld until certain conditions are met, usually over 6–18 months
- Working capital adjustments: These can lead to last-minute price reductions if your inventory or cash flow levels aren’t aligned
- Equity incentives: Some aggregators offer stock in their parent company, which may be illiquid or hard to value
Exclusivity Clauses: More Binding Than You Expect
Exclusivity provisions prevent you from negotiating with other buyers while the aggregator completes due diligence. These periods can stretch 45 to 90 days or more.
Questions to Ask Before Agreeing
- What happens if the buyer drags out diligence?
- Is there a “drop-dead” date after which exclusivity ends?
- Can you walk away without penalty if they materially change their offer?
The longer you’re locked in, the more leverage the aggregator holds.
Due Diligence Rights and Seller Obligations
LOIs often lay out expectations for how much access the buyer gets during diligence—and what the seller must provide.
Risky Terms to Look For
- Unlimited access to employees or vendors without your oversight
- One-sided timelines for document delivery
- Language allowing the buyer to cancel for “any reason”
You want clear parameters around what’s shared, when, and how.
Reps, Warranties, and Indemnity Language
While deeper legal terms are finalized during the purchase agreement, many LOIs hint at future obligations.
Early Red Flags
- Broad seller liability with no cap
- No mention of a “basket” (threshold before indemnification kicks in)
- Lack of a time limit on how long you can be held liable
Pushing back at the LOI stage can help set more favorable final terms.
Employment and Transition Agreements
Aggregators often want the owner to stay on post-acquisition—but LOIs may be vague about what this really means.
Don’t Miss These Points
- Will you be an employee, consultant, or advisor?
- How long are you expected to stay on?
- Are you paid separately for transition support?
- What are grounds for termination during that period?
A handshake agreement now can lead to burnout and unpaid labor later.
Intellectual Property Ownership Assumptions
Some LOIs contain language implying the aggregator automatically owns all branding, content, and supplier relationships the moment diligence begins.
Protect Your Business Assets
- Clarify that IP transfer occurs only after final deal closure
- Retain control over email lists, ad accounts, and domains during diligence
- Don’t grant blanket access without specific purpose and timelines
Your assets are your leverage until the deal is done.
Penalties and Termination Clauses
LOIs occasionally include financial or legal penalties for walking away—even though the deal is supposed to be non-binding.
Look For
- Clauses demanding seller pays costs if the deal fails
- Language suggesting a moral obligation to proceed
- Penalties tied to exclusive negotiation breaches
If it feels too restrictive, consult a lawyer before signing.
Negotiating the LOI on Equal Terms
You’re allowed to push back on an LOI just like any other legal document. Don’t assume the first draft is final.
Smart Moves
- Ask for mutual exclusivity: if they can walk, so can you
- Define key terms like “material change” or “good faith”
- Shorten exclusivity to match their average diligence timeline
- Get clarity on payment timing and structure breakdown
Negotiating the LOI sets the tone for how the rest of the deal will go.
Conclusion: Read Between the Lines Before You Sign
An LOI from an aggregator may seem like the beginning of your big exit—but it’s often just the start of months of scrutiny, negotiation, and legal hurdles. The more vague the language, the more power shifts toward the buyer during due diligence.
Understanding these hidden terms gives you the control to walk away or revise the offer before it’s too late. This is especially important when you plan to sell my ecommerce business and want to walk away with both clarity and fair value.