Letter of Intent Template for Acquiring an Arborist & Tree Care Business

Parties and Business Identification

Identifies the buyer (individual, LLC, or acquiring entity), the seller (individual owner or business entity), and the target business by legal name, DBA, and primary operating location. In tree care deals, this section should also reference whether the transaction covers a sole proprietorship, S-Corp, or LLC, since many owner-operators have not separated personal and business assets cleanly.

💡 Confirm the legal entity structure early. Many tree care operators run revenue through a sole proprietorship or single-member LLC with equipment titled personally. Clarify whether Buyer is acquiring assets only or assuming any entity. If the seller operates under multiple DBAs or has a second entity owning equipment, both must be identified here to avoid gaps in the asset schedule later.

Purchase Price and Valuation Basis

States the proposed purchase price, the valuation methodology used to arrive at it, and any adjustments tied to working capital, equipment appraisal, or contract verification. Tree care businesses are typically valued at 2.5x–4.5x SDE or EBITDA, with the multiple driven heavily by the percentage of recurring contract revenue and quality of the equipment fleet.

💡 Tree care sellers often overestimate business value because they blend high-margin removal jobs with lower-margin recurring work. Buyers should be prepared to disaggregate revenue streams and apply different multiples — recurring maintenance contracts may justify 3.5x–4.5x SDE while project-based removal revenue may warrant 2.5x–3.0x. Equipment condition is the second biggest valuation variable; push for an independent appraisal rather than accepting book value or seller estimates, especially on chippers, bucket trucks, and cranes older than seven years.

Deal Structure and Payment Terms

Defines how the purchase price will be funded — typically a combination of SBA 7(a) loan proceeds, seller financing, buyer equity, and sometimes an earnout. Most arborist acquisitions in the $1M–$5M range use SBA financing, which requires specific seller note subordination terms and buyer equity minimums.

💡 SBA lenders will require seller notes to be on full standby for a period (typically 24 months) and will cap total seller financing as part of the injection calculation. Sellers in tree care deals often push back on earnouts tied to revenue retention because they feel they cannot control whether customers follow them. Buyers should structure earnouts around objective, verifiable metrics like contract renewal rates or EBITDA, not subjective relationship factors. If the seller is staying on for transition, clarify that earnout obligations survive even if the seller departs early.

Assets Included in the Sale

Enumerates the specific assets being transferred, which in tree care businesses typically include the equipment fleet, customer contracts, business name and phone numbers, website and online reviews profiles, tools and safety equipment, and any municipal or HOA service agreements. Excludes typically include accounts receivable (unless negotiated), real property, and personal vehicles.

💡 The equipment schedule is frequently incomplete or inaccurate in tree care transactions — sellers list equipment by memory rather than from title records. Require a formal equipment list with VINs, model years, and current location before signing the LOI. Also confirm that any leased equipment (aerial lifts, trailers) is disclosed and whether leases are assumable. Google reviews and the Google Business Profile are among the most valuable intangible assets in a local tree care business; confirm these are transferable with email account control transferred at closing.

Due Diligence Period and Access

Establishes the length of the due diligence period, the scope of information and access the buyer is entitled to, and any conditions under which the buyer may extend or terminate. Tree care due diligence is more complex than many service businesses because it requires equipment inspection, insurance history review, and contract verification in addition to financial analysis.

💡 Forty-five days is often insufficient for tree care deals when equipment inspection, workers' comp review, and SBA lender underwriting are all running concurrently. Request 60 days and build in a 15-day extension right. Workers' compensation loss run history is critical — a single large claim in the trailing five years can dramatically affect insurability and cost for the buyer post-close. Require five years of loss runs, not the industry-standard three, given the high-injury-rate nature of tree work.

Exclusivity and No-Shop Period

Prevents the seller from soliciting or entertaining competing offers during the due diligence period, giving the buyer protected time to invest in diligence without risk of being outbid mid-process.

💡 Sixty to ninety days of exclusivity is standard and reasonable for tree care deals given SBA underwriting timelines. Sellers should not agree to open-ended exclusivity — cap it at 90 days with a mutual written extension option. Buyers using SBA financing should communicate their lender's estimated timeline upfront so sellers understand why the exclusivity window is necessary. Some sellers resist hard exclusivity; if so, negotiate a right of first refusal on any competing offer as a compromise.

Seller Transition and Non-Compete

Defines the seller's post-closing involvement in the business, including a transition period of hands-on training and a non-compete covenant restricting the seller from starting or joining a competing tree care operation in the same geographic market.

💡 Owner dependency is the single largest risk in tree care acquisitions. A 90-day transition is the minimum; 180 days is strongly recommended when the seller personally manages estimating, key account relationships, or crew supervision. Non-compete radius should reflect the actual service geography — 25 miles is appropriate for dense urban markets, 50 miles for rural or suburban operators with broad reach. ISA-certified sellers who could immediately compete by joining a competitor pose a specific risk; ensure non-solicitation of employees is included alongside the non-compete covenant.

Conditions to Closing

Lists the specific conditions that must be satisfied before the transaction can close, including financing approval, license and certification transferability, equipment appraisal results, and any required third-party consents for customer contracts.

💡 Municipal and HOA contracts are frequently non-assignable without the contracting entity's written consent — this can create significant closing timeline delays if discovered late. Add contract transferability confirmation to the due diligence checklist immediately after LOI execution. State arborist licensing requirements vary significantly; confirm whether licenses are held by the business entity or by individual employees, and whether key licensed employees are committed to remaining post-close.

Confidentiality

Establishes that both parties will maintain strict confidentiality regarding the existence of the transaction, all financial information shared, and all customer and employee data accessed during due diligence.

💡 Confidentiality is especially sensitive in tree care businesses where employees and customers may react negatively to news of a pending sale. Sellers are often anxious about crew members learning the business is for sale — experienced climbers and arborists are highly mobile in a tight labor market and may leave pre-emptively. Buyers should agree to limit disclosure to essential advisors only and communicate a clear employee communication plan as part of transition planning.

Non-Binding Nature and Governing Law

Clarifies which provisions of the LOI are legally binding (typically confidentiality, exclusivity, and governing law) and which are non-binding expressions of intent, and establishes the jurisdiction and governing law for any disputes.

💡 Sellers sometimes push to make the entire LOI binding, particularly if they have invested heavily in preparing the business for sale. Resist this — a binding LOI without a definitive purchase agreement creates enforcement ambiguity. However, binding confidentiality and exclusivity provisions are reasonable and standard. Ensure governing law matches the state where the business operates, not where the buyer's entity is formed.