LOI Template & Negotiation Guide for Acquiring a Coding Bootcamp

Parties and Transaction Overview

Identifies the buyer entity, seller entity, and the legal structure of the proposed transaction — whether it is an asset purchase or stock purchase. For coding bootcamps, asset purchases are more common because they allow the buyer to exclude ISA liabilities and select which contracts, licenses, and curriculum assets to assume. Stock purchases may be preferable if state licensing or accreditation is entity-specific and non-transferable.

💡 Sellers should push for stock sale treatment if they have favorable state licenses that cannot be transferred independently. Buyers should insist on asset purchase language to avoid inheriting undisclosed ISA defaults, student refund disputes, or regulatory violations. Clearly list which liabilities — particularly ISA obligations — are assumed versus excluded. If the bootcamp operates under a DBA, confirm the legal entity name on all state licensing documents matches the entity being acquired.

Purchase Price and Valuation Basis

States the proposed enterprise value and the methodology underlying it. Coding bootcamp valuations typically apply a 2.5x–4.5x EBITDA multiple, with the upper end reserved for bootcamps with documented job placement rates above 70%, diversified B2B and B2C revenue, and low owner-dependency. Revenue multiples are less common but may appear when EBITDA is temporarily suppressed by one-time curriculum investment costs.

💡 Buyers should request a quality of earnings (QoE) analysis before signing a binding LOI, particularly to validate that owner compensation, personal expenses, and one-time curriculum development costs have been accurately added back. Sellers should present three years of financials with a clear EBITDA bridge showing normalized owner compensation and any non-recurring technology or curriculum refresh expenses. Disagreements on addbacks — especially founder salary relative to a replacement operator — are the most common valuation disputes at this stage.

Deal Structure and Financing

Outlines how the purchase price will be funded, including the proportion of SBA 7(a) loan proceeds, buyer equity, seller note, and any earnout component. SBA eligibility is a significant advantage for coding bootcamp buyers, reducing the required equity injection and extending repayment terms, but requires the business to demonstrate stable cash flows and meet SBA's standards for eligible passive income exclusions.

💡 Sellers should be prepared for the SBA lender to independently verify enrollment data, student outcome metrics, and state licensing status. SBA lenders have become more cautious with EdTech businesses following industry-wide scrutiny of job placement claims. Buyers should confirm early whether the SBA lender requires additional collateral or a personal guarantee from the seller post-close. Seller notes are often required by SBA lenders on standby for 24 months, meaning sellers should not plan on early repayment of their note.

Earnout Provisions

Defines any contingent consideration tied to post-closing performance metrics. In coding bootcamp acquisitions, earnouts are commonly tied to enrollment cohort completions, job placement rates, or B2B corporate training contract renewals. Earnouts are particularly appropriate when the buyer and seller disagree on valuation due to recent enrollment growth that has not yet fully normalized in trailing financials.

💡 Sellers should insist on clear, objective measurement criteria for each earnout trigger and negotiate for buyer's obligation to operate the business in a manner consistent with achieving earnout milestones — particularly around marketing spend and enrollment targets. Buyers should resist earnout structures that give the seller operational control post-close and should cap total earnout exposure. Both parties should agree in advance on who verifies job placement data — an independent third party is often the cleanest solution for disputes.

Income Share Agreement Portfolio Treatment

Addresses how any outstanding ISA receivables and obligations will be handled at closing. ISA portfolios are a material balance sheet item for many bootcamps and carry significant risk related to default rates, state-level regulatory compliance, and CFPB scrutiny. Most buyers exclude ISA assets and liabilities from the acquisition and negotiate a separate purchase or assignment agreement if they wish to acquire the receivable stream.

💡 Buyers should treat ISA portfolio acquisition as a separate transaction requiring independent legal review in every state where ISA obligors reside, as ISA enforceability varies significantly by jurisdiction. Sellers who want to include ISA receivables in deal value should prepare a clean schedule of all active ISAs, including origination date, income threshold, default status, and any disputes. A portfolio with default rates above 20% is typically a value killer — sellers should resolve or write off delinquent ISAs before going to market.

Due Diligence Period and Access

Establishes the timeline and scope of buyer's due diligence investigation, including access to financial records, student outcome data, instructor agreements, state licensing files, and LMS platform data. Due diligence for coding bootcamps typically requires 45–75 days given the complexity of verifying job placement claims and reviewing state licensing compliance across multiple jurisdictions.

💡 Sellers should organize the data room before LOI signing to avoid delays that erode buyer confidence. Particular attention should be paid to state licensing: if the bootcamp operates in states requiring a Private Postsecondary Education Act license or equivalent, buyers need to confirm whether those licenses are transferable or require re-application under new ownership. Buyers should hire an EdTech regulatory attorney in any state where the bootcamp has enrolled more than a handful of students to flag compliance issues before closing.

Exclusivity and No-Shop Period

Grants the buyer a period of exclusive negotiation during which the seller agrees not to solicit or entertain competing offers. Standard exclusivity periods for lower middle market EdTech deals range from 60 to 90 days, with extensions available by mutual agreement if due diligence is progressing in good faith.

💡 Sellers with multiple interested parties should negotiate a shorter exclusivity window — 45–60 days — and require the buyer to demonstrate tangible progress at the 30-day mark before exclusivity automatically extends. Buyers should request a modest breakup fee or expense reimbursement provision if the seller terminates exclusivity without cause, given the significant cost of EdTech due diligence including regulatory review and student outcome verification.

Representations, Warranties, and Indemnification Outline

Summarizes the key representations the seller will make in the definitive agreement and the indemnification framework that will protect the buyer from pre-closing liabilities. For coding bootcamps, reps and warranties around student outcome accuracy, state licensing compliance, ISA enforceability, and curriculum IP ownership are particularly critical.

💡 Sellers should push back on indemnification caps that expose them to more than 15–20% of purchase price for general reps and be prepared to negotiate carve-outs for fraud and intentional misrepresentation. Buyers should insist on specific reps regarding job placement rate methodology — courts and regulators have scrutinized bootcamp placement claims heavily, and a buyer inheriting inflated placement marketing faces significant reputational and regulatory exposure. Representations and warranties insurance is available for this deal size but adds cost; evaluate based on seller's financial wherewithal to backstop indemnification claims.

Employee and Instructor Transition

Addresses the treatment of current employees and instructors during and after the transition. Instructor continuity is a primary concern for buyers because coding bootcamp quality is heavily dependent on the teaching team's competency and relationships with students and employer partners.

💡 Buyers should identify the two or three instructors most responsible for student satisfaction scores and employer relationships before signing the LOI and confirm their willingness to remain post-close as a pre-condition to proceeding. Sellers who are the primary instructor should be prepared to commit to a meaningful transition period — at least 6 months — and document curriculum delivery processes thoroughly so institutional knowledge does not depart with the founder. Non-solicitation agreements for instructors should be reasonable in scope to be enforceable.

Closing Conditions

Lists the conditions that must be satisfied before the transaction can close, including financing contingency, regulatory approvals, and material adverse change provisions. State licensing transfer or re-application is often the longest-lead-time closing condition for coding bootcamp acquisitions.

💡 State licensing timelines vary dramatically — California's BPPE approval process can take 6–12 months for a new owner application, while other states may allow a simple change-of-ownership notification. Buyers must engage an EdTech regulatory attorney early to map every state where the bootcamp has enrolled students and confirm the licensing strategy before signing the LOI. Sellers should disclose any pending regulatory correspondence immediately to avoid a material adverse change claim during due diligence.