Why the LOI Stage Matters
When an entrepreneur receives a letter of intent, everything suddenly feels real. It’s often the moment a potential sale shifts from idea to imminent possibility. It’s also when many sellers begin asking an important question: Who should I be speaking with right now?
An LOI is more than a milestone. It’s the point where tax structure, deal terms, and timing begin to take shape. And the decisions made at this stage often have a greater impact on a seller’s tax outcome than anything that happens later in the process.
The Role of Your Current Advisory Team
Most sellers already have strong relationships with their financial advisors, accountants, and corporate counsel. Those relationships remain essential. What changes at the LOI stage is the need for specialized tax planning around the structure of the deal itself.
Why a Tax Attorney Becomes Important
A tax attorney focused on liquidity events looks at questions such as:
• How should the seller’s equity be characterized?
• Which parts of the transaction may trigger ordinary income?
• How will timing affect recognition?
• Are there opportunities for QSBS planning, installment strategies, or entity adjustments?
• How do different structures affect the seller’s economic and tax position?
These issues typically cannot be solved through after-the-fact review. They are questions of design, and they are best addressed while the deal is still flexible and the buyer is still open to adjustments.
You Don’t Need Years of Notice
This doesn’t mean planning must start years in advance. Many high-impact strategies can still be implemented when a seller is already negotiating terms or is close to closing. What matters is bringing the right expertise into the conversation early enough for structure to match the seller’s goals.
The Smart Next Step
If you’ve received an LOI or expect one soon, the most effective next step is to confirm your advisory team and add a tax attorney who focuses on liquidity events. That combination helps ensure the deal you sign aligns with the outcome you want.
