Letter of Intent Template for Acquiring a CFO Advisory Services Firm

Parties and Transaction Overview

Identifies the buyer entity, seller entity, and the nature of the proposed transaction — whether an asset purchase or stock/membership interest purchase. For CFO advisory firms structured as LLCs or S-Corps, buyers typically prefer asset purchases to avoid inheriting unknown liabilities, though sellers often prefer stock sales for tax treatment. This section also states the target business name, primary location, and a brief description of services.

💡 Sellers of CFO advisory firms frequently push for stock sales to achieve capital gains treatment on the full purchase price. Buyers should counter by noting the key person and client contract assignment risks inherent in asset purchases versus stock acquisitions in this sector. If a stock sale is agreed upon, ensure representations and warranties insurance is budgeted and that client assignment consent requirements are addressed separately in the transition plan.

Purchase Price and Valuation Basis

States the proposed total enterprise value, the valuation methodology applied, and the trailing financial period used. CFO advisory firms in the $1M–$5M revenue range are typically valued on a multiple of EBITDA or Seller's Discretionary Earnings (SDE), adjusted for add-backs including owner compensation above market rate, personal expenses run through the business, and one-time project revenue excluded from the recurring retainer baseline.

💡 Sellers should prepare a clear add-back schedule prior to LOI negotiation, especially if they operate on cash-basis accounting or commingle personal expenses. Buyers should insist on seeing accrual-basis financials or a CPA-compiled recast before finalizing the proposed multiple. Client concentration above 20% for any single client is a meaningful valuation haircut trigger and should be explicitly addressed in the LOI's price adjustment provisions.

Deal Structure and Payment Terms

Outlines how the total purchase price will be funded — including equity, SBA 7(a) debt, seller note, and earnout components. CFO advisory firm acquisitions frequently involve layered structures due to key person risk, client retention uncertainty, and SBA lender requirements around seller participation. This section should clearly define the cash at close, the seller note terms, and the earnout measurement framework.

💡 SBA 7(a) lenders financing CFO advisory firm acquisitions will typically require the seller to remain engaged under a consulting or employment agreement for 12–24 months and will impose standby provisions on any seller note. Buyers should negotiate earnout metrics tied to revenue retention rather than EBITDA post-close to avoid disputes about buyer-imposed cost changes affecting profitability. Sellers should push for earnout acceleration provisions if client retention exceeds 95% or if revenue grows materially above the baseline.

Client Contract Portability and Assignment Consent

Addresses how client retainer agreements will be assigned to the buyer at closing and establishes the process for obtaining client assignment consent where required by contract. This is the most operationally sensitive LOI provision in CFO advisory acquisitions because client contracts frequently contain anti-assignment clauses or require affirmative client consent to transfer.

💡 Many fractional CFO client agreements are informal or were drafted without acquisition scenarios in mind, meaning they may be silent on assignment rather than explicitly prohibiting it. Buyers should request copies of all client agreements during due diligence and have legal counsel review assignment provisions before signing the definitive agreement. Sellers should proactively introduce key clients to the acquiring firm's leadership during the transition period to reduce consent friction and improve post-close retention.

Key Person Transition and Employment Obligations

Defines the seller's post-closing transition obligations, including any consulting or employment agreement, client introduction responsibilities, and non-solicitation commitments. Given the high degree of key person dependency in most CFO advisory firms, this section often determines whether the earnout is achievable and whether clients remain post-close.

💡 Sellers often underestimate how central their non-solicitation agreement is to buyer confidence and lender approval. SBA lenders will require non-compete and non-solicitation agreements as a condition of loan approval. Sellers should negotiate transition compensation as a separate line item from the earnout to ensure they are compensated for transition work regardless of client retention outcomes. Buyers should avoid overly broad geographic non-competes that would prevent a retiring seller from doing any independent work.

Due Diligence Scope and Timeline

Establishes the due diligence period, the categories of information to be provided, and the process for information sharing. For CFO advisory firms, due diligence is heavily weighted toward client relationship analysis, financial restatement review, and staff advisor retention assessment.

💡 Sellers should resist providing full client contact information or direct client access until later in due diligence after an NDA is signed and the LOI is mutually executed. A tiered information release approach — aggregated financial data first, client-level detail after exclusivity is confirmed — protects seller confidentiality while still supporting buyer diligence. Buyers should prioritize reviewing client contract assignment clauses and advisor non-solicitation agreements in the first week of diligence as these are the most common deal-breakers in CFO firm acquisitions.

Exclusivity and No-Shop Provision

Grants the buyer an exclusive negotiating period during which the seller agrees not to solicit or entertain competing offers. This is standard in LOIs but especially important in professional services acquisitions where sellers may be in simultaneous conversations with multiple acquirers including competitors.

💡 Sellers should push for a shorter exclusivity window — 45 days rather than 60–90 days — given the reputational risk of a failed process in a relationship-driven industry where clients and staff may sense uncertainty. Buyers should negotiate the right to extension as a standard provision and tie it to evidence of good-faith progress rather than automatic renewal. Both parties should agree on a clear timeline for definitive agreement execution at the end of the exclusivity period.

Representations, Warranties, and Conditions to Close

Outlines the seller's key representations about the accuracy of financials, client contract status, staff advisor agreements, and absence of undisclosed liabilities, as well as the conditions that must be satisfied before closing can occur.

💡 In CFO advisory firm deals, the most frequently disputed representation at closing is whether any client has informally signaled intent to terminate — because clients often tell their trusted CFO advisor informally before sending formal notice. Sellers should be transparent about any at-risk clients discovered during due diligence and negotiate a purchase price adjustment mechanism rather than risk a post-close indemnification claim. Buyers should require a bring-down certificate at closing confirming all representations remain accurate as of the closing date.