The email arrives and it looks like validation. A private equity firm has found you, they love what you've built, and they're putting a number on it - I number that seems almost excessively large, almost double what a typical buyer would offer. The letter of intent (LOI) is polished, friendly, and full of language about partnership and shared vision. It feels like the beginning of something exciting.

For a founder who has spent years building something from nothing, that moment is intoxicating. And that's exactly when you are most vulnerable.

What You Cannot Introduce After the LOI Is Signed

By the time the parties move to definitive documents, the other side considers the deal framework settled. Introducing a new structural concept at that stage — something that wasn't in the LOI — is essentially asking them to reopen the deal. And they won't. Not without significant friction, not without leverage, and often not at all.

The three things founders most commonly lose at this stage:

Security for the deferred payment. PE deals routinely defer a portion of the purchase price — payable one, two, or three years after closing, conditioned on continued employment. That deferred payment is a contractual obligation, but it is an obligation against a newly-formed entity with no operating history. If you want any security behind it — even a subordinated lien that sits below the senior lender — you need to ask for it before the deal structure is set. Once the LOI is signed and the model is built around a clean balance sheet, you will be told it isn't possible. The arguments will sound technical and airtight. They are also, in many cases, a negotiating position rather than an actual constraint — but you have to know the difference, and you have to be in a position to push back.

The IP and trademark structure. For founders whose business is built on a brand — a name, a platform, a following, a trademark — how the intellectual property is handled is one of the most consequential questions in the deal. An LOI that says "the assets of the Business will transfer to the platform" may mean that your trademark, your creative identity, and your name become property of a company you no longer fully control. Whether your trademark transfers or is licensed, whether you retain the right to use your own name in your career going forward, whether a co-existence agreement governs your personal use — these are structural questions that need to be addressed before a deal framework is accepted. They are very difficult to introduce as new concepts in definitive document negotiations.

Governance rights. If you are rolling equity into the acquiring platform — if you are giving up your company in exchange for, among other things, a stake in something larger — you should have a seat at the table where decisions about that platform are made. A board seat is appropriate for a founder contributing a cornerstone asset. It is also something PE firms will tell you is not part of their standard structure. That conversation is far more winnable before you have signed an LOI and entered exclusivity than after.

The Exclusivity Trap

Most LOIs contain an exclusivity provision — binding, unlike the rest of the letter — requiring you to stop talking to every other potential buyer for 60 to 90 days while the deal is documented. The moment you sign, you are off the market. The other side knows it. Your leverage, which was real when they wanted your signature, has shifted. You are now negotiating from inside a structure they designed.

A founder without counsel at the LOI stage often doesn't realize this is the moment that matters. She is focused on the headline number, she is excited about the partnership narrative, and she is not thinking about subordinated liens or trademark co-existence agreements. Those sound like closing details. They are not.

What It Looks Like When You Get It Right

The founders who fare best in these transactions are the ones who involve experienced counsel before they respond to the first email — not at the LOI stage, not at the term sheet stage, but before they signal what they will accept.

That early involvement changes the conversation. It means you understand what you are looking at before you get excited about it. It means the security question gets raised while you still have something the other side wants — your cooperation, your enthusiasm, your signature. It means the IP structure gets addressed before "assets will transfer to the platform" becomes an agreed-upon starting point. It means the pressure tactics — "this is how we structure it across all of our partners," "a lien on these assets would hurt our ability to raise debt," "the others are comfortable with this" — get evaluated by someone who has heard them before and knows which ones are real constraints and which ones are negotiating positions.

By the time most founders call us, the LOI is signed and we are working with what we have. There is a lot we can do. But there are things we cannot give back: the security interest the other side has already said no to, the board seat that was never on the table, the IP ownership that was conceded before anyone thought to ask.

The Moment That Matters

If a private equity firm, a strategic acquirer, or any sophisticated buyer has reached out about your business — even informally — that is the time to pick up the phone. Not after three more conversations. Not after you've gotten excited and told your team. Before you respond.

The other side has done this many times. The LOI they send you reflects that experience. You deserve someone in your corner who has too.

Business Law Group represents founders in M&A transactions, from initial buyer outreach through closing. If you've received acquisition interest and want to understand what you're looking at before you respond, reach out.

This article is for informational purposes only and does not constitute legal advice. Every transaction is different. Contact a licensed attorney to discuss your specific situation.