Free Letter of Intent Builder for Buying or Selling a Business in Alberta
Get a free LOI for your Alberta business acquisition or sale in less than 5 minutes.
If you are buying or selling a business in Alberta, your Letter of Intent (LOI) sets the commercial baseline for everything that follows. Buyers and sellers who use a simple Letter of intent template often pay for it later in higher legal fees, renegotiated terms, and deals that fall apart at the SPA stage.
The Outsiders LOI Builder is free. It covers every section a properly drafted Letter of intent should include, and asks the right questions in the right order to get you there. An LOI of this quality would cost $3,000 to $5,000 or more with a law firm.
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What is a Business Purchase Letter of Intent and who should use this form?
A business purchase letter of intent records the main terms of a proposed acquisition before the parties negotiate a definitive purchase agreement. It creates a written framework for negotiations and typically addresses the purchase price, payment structure, important conditions, due diligence, exclusivity, and the anticipated closing date. This form is intended for buyers and sellers of Alberta businesses who have discussed the essential commercial terms of a proposed share purchase and want to document them before proceeding further. It may also be used by business brokers and other advisors to help the parties organize the relevant information. Most commercial terms in a letter of intent are generally non-binding. However, provisions concerning confidentiality, exclusivity, expenses, public announcements, and governing law may be legally binding as soon as the document is signed. The Outsiders Letter of Intent Builder guides you through the key terms of an Alberta share purchase and generates a structured draft for review. Because the terms can have significant legal, tax, and financial consequences, an experienced mergers and acquisitions lawyer should review the document before it is signed or shared.
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Frequently Asked Questions
What is an earnout and when should I include one?
An earnout is a deferred payment mechanism where a portion of the purchase price is paid after closing, conditional on the business achieving agreed financial targets, typically EBITDA or revenue, over one or more measurement periods following the closing date. Earnouts are used when the buyer and seller cannot agree on value at closing. The seller believes the business will perform well post-closing and is willing to accept deferred consideration tied to that performance. The buyer is unwilling to pay full price upfront for results that have not yet been achieved. The risks for the seller are significant. Depending on how the deal is structured, the seller may not control the business and the key operating or investment decisions. Generally, the buyer controls the decisions that affect EBITDA. Without strong protective covenants in the definitive agreements, the buyer may have significant control over how the business is operated during the earnout period. Those decisions can reduce EBITDA and eliminate your earnout payment entirely, whether intentionally or not. A common issue is the ability of a buyer to divert revenues that otherwise would have counted towards the EBITDA of the business. Experienced M&A lawyers flag this kind of operational item and fight for protective language around it. The Outsiders Letter of intent Builder supports standard and reverse earnouts across one or two measurement periods. If you are considering an earnout, the structure, metrics, protective covenants, and dispute resolution mechanism all need careful legal review before you commit to them in an LOI. This is one of the most heavily negotiated and litigated areas of M&A law.
What is a Vendor Take-Back Note and should I include one?
A Vendor Take-Back Note, or VTB, is a form of seller financing. Instead of receiving the full purchase price in cash at closing, the seller agrees to accept a portion of the proceeds as a promissory note from the buyer, repaid over time with interest. VTBs are common in Alberta's private mid-market for several reasons. They bridge valuation gaps between what a buyer can pay at closing and what a seller believes the business is worth. They signal seller confidence in the business's continued performance. They are often quite helpful in the buyer being able to secure financing. The risks for the seller are real. You are extending credit to the buyer, secured only by whatever security you negotiate, typically a personal guarantee, a general security agreement, or both. If the buyer defaults, you are a creditor, not an owner. Recovery can be difficult and expensive. The full face value of the VTB note is generally treated as proceeds of disposition and is taxable in the year of sale, regardless of when the payments are actually received. This can create a mismatch between your tax liability and your actual cash in hand, which is an important planning consideration before agreeing to VTB terms. Certain steps may be taken to defer the inclusion of the VTB amount in income in the year of sale. An M&A lawyer with tax experience will be able to assist you with this. Whether to include a VTB depends on your financial position, your confidence in the buyer, the strength of the security being offered, and whether the buyer has the cash to close without one. An M&A lawyer and your accountant should both be involved in this decision before you agree to VTB terms in an LOI.
What if I don't know all the terms yet?
That is normal. Many buyers and sellers start the LOI process before all commercial terms are fully agreed. The Outsiders LOI Builder is designed to accommodate this. If you don't know a term, you can leave it blank and the tool will insert an NTD placeholder in your LOI flagging that the item needs to be resolved before signing. What you should not do is guess at terms you don't understand, particularly on price mechanics, earnout structure, working capital, or VTB terms. A poorly chosen number or structure in those sections can be very difficult to walk back once the other side has seen it. If you are unsure on any of these points, book a free consultation with our team before you run the tool. At the Letter of Intent stage, it is common for the involved parties to agree on the broad terms of a business deal while leaving certain details open for further discussion. The LOI is a preliminary commitment, not a requirement that every issue be finalized immediately. What matters is that both parties understand which basic terms have been agreed and which still require negotiation or more detailed information. One thing you can do is build out the LOI and then circulate it to the other side to discuss and negotiate the various terms. If one party is still considering an important issue, it is usually better to identify that clearly than to create the impression that the parties agree when they do not. We highly recommend having an experienced M&A lawyer review the LOI before you send it out for negotiation as you may end up generally agreeing to terms you need to walk back later. No LOI should be signed without final review from, and advice given by, an experienced M&A lawyer. Think of this like building a bridge without sign-off from an engineer, or taking medication without sign-off from a doctor. In this case, the consequences are financial in nature, but no less important.
What are the NTD items in my Letter of intent?
NTD stands for "Note to Drafter." These are placeholders that appear in your LOI where a key term could not be completed based on: (1) the information you provided, (2) an inconsistency in the decisions made using the Outsiders LOI Builder, or (3) when the term requires further negotiation or professional input before it can be finalized. Common NTD items include the working capital target, the earnout financial metric and source document, and the basis of offer assumptions. Your LOI will include a summary box at the end listing every NTD item that needs to be resolved before the document is ready to sign. You should not sign or share a Letter of Intent with unresolved NTD items until you understand what each item means and have decided how you want it addressed. An M&A lawyer can help you work through them efficiently.
What is posture and which one should I choose?
Posture refers to whose interests the Letter of Intent language favours. While an experienced M&A lawyer will take nuanced positions on posture for each commercial point, that level of detail is not possible in a generic Letter of Intent building tool. The Outsiders Letter of Intent Builder offers three options: Buyer-Friendly, Seller-Friendly, and Neutral. • Buyer-Friendly language gives the buyer more protection through closing, including tighter representations and warranties, longer survival periods, and more favourable liability provisions. • Seller-Friendly language generally provides the seller with more flexibility and limits post-closing exposure. • Neutral language reflects balanced, market-standard terms that do not strongly favour either side. Which posture you choose depends on your negotiating position and the circumstances of the business deal. A seller with multiple interested buyers may have more leverage to push for Seller-Friendly terms, while a buyer taking on greater risk may prefer Buyer-Friendly language. If you are unsure, Neutral is generally the safest starting point and the easiest position to negotiate from. An experienced M&A lawyer can advise you on which posture makes sense for your proposed transaction.
What should be in a Letter of Intent for a share purchase?
A well-drafted LOI for a share purchase should cover: the parties, the purchase price and how it is structured, payment mechanics including cash at closing, any vendor take-back note, and earnout provisions, the conditions that must be satisfied before closing, exclusivity, confidentiality, conduct of business obligations between signing and closing, representations and warranties at the LOI stage, working capital treatment, liability caps, non-competition and non-solicitation terms, post-closing arrangements for the seller, and governing law. The Outsiders LOI Builder covers all of these. It includes checkboxes for including certain non-essential LOI provisions that we at Outsiders generally recommend to include, depending on the circumstances. Many free or generic LOI templates do not contain this level of optionality or completeness.
Is an LOI legally binding in Canada?
Partially. In Canada, a Letter of Intent is generally not a fully binding contract. The majority of the terms, including price, structure, and conditions, are non-binding and subject to the execution of definitive agreements. However, certain provisions are legally binding from the moment both parties sign, typically exclusivity, confidentiality, no announcements, expenses, and governing law. The binding provisions are enforceable in Canadian courts. For example, a seller who accepts an offer, signs an LOI with an exclusivity clause, and then entertains a competing offer during the exclusivity period is in breach of a binding obligation and can face legal consequences. Similarly, if you agree to attorn to the courts of a different jurisdiction, you will be bound to that jurisdiction for commencing any legal action against the other party. This is why it is important to understand exactly what you are signing before you sign it.
What is the difference between an LOI and a Share Purchase Agreement?
A Letter of Intent sets out the key commercial terms of a proposed transaction at a high level. It is typically short (although not 2-4 pages short), mostly non-binding, and prepared early in the process to confirm that both parties are aligned before significant time and money is spent on legal fees. A Share Purchase Agreement is the definitive legal contract that governs the transaction. It is comprehensive, fully binding, and covers every term of the deal in detail: representations and warranties, indemnification, closing conditions, working capital adjustments, post-closing obligations, and more. It is negotiated after the LOI is signed and due diligence is underway. The more comprehensive your LOI, the less negotiation is required to complete the Share Purchase Agreement. The LOI sets the commercial baseline. The SPA is where that baseline is either confirmed or fought over. Terms that were left vague or seller-unfriendly in the LOI become very difficult to recover in the SPA negotiation. This is why getting the LOI right matters more than most first-time sellers expect.
What is a Letter of Intent for a business purchase?
A Letter of Intent is a document that sets out the key commercial terms of a proposed business acquisition before the parties commit to a binding agreement. It covers the purchase price, deal structure, payment mechanics, conditions, and the timeline for completing the transaction. It is typically prepared after initial negotiations and before the formal Share Purchase Agreement or Asset Purchase Agreement is drafted. Often, the Letter of Intent is entered into and then the potential purchaser completes their due diligence. A Letter of Intent gives the parties involved a clear framework for the proposed business transaction before they invest significant time and money negotiating the final agreement. It brings the fundamental terms of the business deal together and identifies any critical points that still need to be resolved. Although most of the Letter of Intent is non-binding, it establishes the commercial baseline for the transaction and can be difficult to renegotiate later. For that reason, having experienced business lawyers review it before signing is generally advisable.
What's the difference between this LOI and one a lawyer would draft?
The Outsiders Letter of Intent Builder produces a professionally structured Letter of Intent that covers the same sections a lawyer would include: consideration, deal structure, exclusivity, confidentiality, representations, working capital, conditions precedent, non-compete, and post-closing arrangements. For many transactions, it is a strong starting point. The difference is judgment and strategy. A lawyer drafting your Letter of Intent will assess your specific deal, identify risks you may not know to look for, and make deliberate decisions about which terms to push for, which to concede, and how to word provisions to protect you through closing and beyond. What a non-M&A lawyer thinks is "boilerplate" is generally not. The variations on these terms matter immensely, and are the most litigated parts of purchase and sale transactions. The Outsiders Letter of Intent Builder cannot make these assessments or apply that kind of judgement. It applies your inputs to a standard framework. The most common issues we see poorly drafted Letters of Intent (i.e. incomplete) and Letters of Intent where the commercial terms were agreed without understanding their legal or tax consequences. By the time a lawyer is engaged, those terms are very difficult to change. A generic intent sample can show you the structure, but it cannot assess the specific business transaction, due diligence findings, third party approvals, or whether the terms protect the parties involved. That is where a law firm and experienced M&A lawyer add value: applying legal advice and negotiation strategy to the actual business deal.
Will Outsiders Law see my submission?
Yes. The information you submit through the Outsiders LOI Builder is received by Outsiders Law. It is treated as strictly confidential and is not shared with any third party. Submitting the tool does not create a solicitor-client relationship, but if you would like to speak with one of our lawyers about your transaction, we may reach out to follow up. You can also book a free consultation directly at any time.
Which sections of the LOI are legally binding?
Most of an LOI is non-binding. The Outsiders LOI Builder follows standard Canadian M&A practice: the majority of the terms, including price, structure, and conditions, are subject to the negotiation and execution of definitive agreements. The following sections are generally legally binding from the moment both parties sign: • Exclusivity: the seller cannot solicit or entertain other offers during the exclusivity period. • Confidentiality: both parties are obligated to keep the transaction and all shared information strictly confidential. • No Announcements: neither party can make any public disclosure about the transaction without consent. • Expenses: each party bears its own costs, whether or not the deal closes. • Governing Law: the LOI is governed by the laws of Alberta. That said, non-binding does not mean unimportant. A Letter of Intent sets the commercial direction for the proposed transaction and often becomes the reference point for the legal documents that follow. The price, structure, exclusivity period, and key commercial terms set out in the LOI become the baseline for every negotiation that follows. Giving ground at the LOI stage is very difficult to recover later. The other party will often argue that you are trying to renegotiate settled terms, which results in additional legal fees to both parties, and sometimes causes the business deal to fall apart. In some transactions, the two parties agree to make additional provisions binding, such as a deposit mechanic, a financing condition, or a specific conduct of business obligation, because the deal will not move forward without that certainty on both sides. An experienced M&A lawyer will know when to push for binding treatment on a provision and when to leave it non-binding.
Is this legal advice?
No. The Outsiders Letter of intent Builder is a self-serve tool that generates a draft Letter of Intent based on the information you provide. No lawyer reviews your inputs and no solicitor-client relationship is created by using this tool. The output is a starting point, not a finished legal document. The tool can help organize the key terms of a proposed transaction, but it cannot provide legal advice about whether those terms properly protect you or whether the structure makes sense for your specific business transaction. Before you sign or share any LOI with the other party, we strongly recommend speaking with an M&A lawyer to confirm the terms are appropriate for your specific transaction and circumstances. An experienced M&A lawyer will identify issues in your deal structure, flag tax consequences you may not have considered, and explain how the Letter of Intent may affect the final agreement and other legal documents prepared later in the process. They can also recommend changes to protect your position before negotiations progress too far. For a small business sale or acquisition, getting advice early can prevent one party from agreeing to commercial terms that become difficult to change later.
Is the Outsiders LOI Builder tool free?
Yes. The Outsiders Letter of intent Builder is completely free to use. You can build a full Letter of Intent for a share purchase transaction in under 5 minutes at no cost. If you want an editable Word version of your LOI, email us at corporate@outsiders.law and we will send it to you promptly, also at no charge.