A structured, deal-ready LOI guide built for Amazon FBA, Shopify, and DTC brand acquisitions in the $1M–$5M revenue range — covering purchase price, earnouts, platform transfer protections, and due diligence terms.
A Letter of Intent (LOI) is the foundational document that initiates a structured acquisition process for an e-commerce business. For buyers and sellers of Amazon FBA businesses, Shopify stores, and direct-to-consumer brands, the LOI establishes the economic terms of the deal before either party invests significant time and legal fees in a definitive purchase agreement. In the lower middle market e-commerce space — where businesses typically trade at 2.5x to 4.5x SDE or EBITDA — the LOI must address unique risks that don't exist in traditional brick-and-mortar deals: platform account transferability, inventory valuation, traffic source sustainability, and seller account health. A well-drafted e-commerce LOI signals buyer sophistication, protects both parties during due diligence, and creates a clear roadmap from offer to closing. Most LOIs in this segment are 4–8 pages, non-binding except for exclusivity and confidentiality provisions, and set a 45–90 day due diligence window before a definitive Asset Purchase Agreement or Stock Purchase Agreement is executed.
Find E-commerce Businesses to AcquireParties and Business Identification
Identifies the legal buyer entity, the seller, and the business being acquired. In e-commerce deals, this section must clearly identify all digital assets included — Amazon seller account, Shopify store URL, domain names, social media accounts, email lists, and trademarks — because the 'business' is defined by its digital infrastructure, not a physical location.
Example Language
This Letter of Intent is entered into as of [Date] by and between [Buyer Legal Entity Name], a [State] LLC ('Buyer'), and [Seller Legal Name or Business Entity] ('Seller'), with respect to the proposed acquisition of [Business Name] (the 'Business'), operating primarily through [Amazon Seller Central Account ID / Shopify Store URL / DTC website domain], including all associated digital assets, intellectual property, inventory, supplier relationships, and customer data as further described herein.
💡 Sellers should confirm that every revenue-generating digital asset is explicitly listed in this section. Buyers frequently omit secondary Amazon storefronts, international marketplace accounts, or B2B wholesale portals. Ensure the Amazon seller account, all ASINs, Shopify admin access, domain registrar accounts, and email marketing platform accounts are identified by name. Ambiguity here creates leverage disputes later.
Purchase Price and Valuation Basis
States the proposed total acquisition price, the valuation methodology used (typically a multiple of trailing twelve-month SDE or EBITDA), and how that figure was calculated. E-commerce businesses in the $1M–$5M revenue range typically trade at 2.5x–4.5x SDE depending on channel diversification, growth trajectory, brand defensibility, and platform concentration risk.
Example Language
Buyer proposes to acquire 100% of the Business assets for a total purchase price of $[X,XXX,XXX] ('Purchase Price'), representing approximately [X.Xx] times the Business's trailing twelve-month Seller's Discretionary Earnings (SDE) of $[XXX,XXX] for the period ending [Date]. This valuation reflects the Business's diversified revenue across [Amazon / Shopify / DTC channels], [X]% repeat customer rate, and [X] years of operating history. The Purchase Price is subject to adjustment based on findings during the due diligence period as described herein.
💡 Buyers should anchor the multiple explicitly to verified SDE — not revenue or gross profit — and flag that the stated SDE will be independently verified against platform analytics, bank statements, and tax returns during due diligence. Sellers should push back on any language allowing the buyer to unilaterally reduce the purchase price post-LOI without a material adverse change trigger. Both parties should agree in writing on which add-backs are included in the SDE calculation before signing.
Deal Structure and Payment Terms
Outlines how the purchase price will be funded — cash at closing, SBA 7(a) financing, seller financing, or an earnout — and the relative proportions of each. E-commerce deals at this size are frequently SBA-eligible, with buyers financing 80–90% through an SBA 7(a) loan and sellers holding a 10% equity injection note that is put on standby for 24 months per SBA requirements.
Example Language
The Purchase Price shall be funded as follows: (i) $[XXX,XXX] in cash at closing sourced from Buyer's equity contribution; (ii) $[X,XXX,XXX] financed through an SBA 7(a) loan commitment from [Lender Name or 'a qualified SBA lender'], subject to credit approval; and (iii) $[XXX,XXX] in seller financing in the form of a promissory note bearing [X]% annual interest, payable over [24–36] months following closing, which the parties agree to place on full standby in compliance with SBA guidelines. Any performance-based earnout provisions are described separately in Section [X].
💡 Sellers negotiating seller financing should insist on a personal guarantee from the buyer entity's principals and UCC-1 security interest in the business assets if the SBA lender permits it. Buyers using SBA financing should disclose the lender's standby requirement early — requiring a seller note to be on standby for 24 months is a material term that affects seller cash flow planning. If an earnout component is included, define the measurement metric (gross revenue, EBITDA, or Amazon BSR) and the calculation period with no ambiguity.
Earnout Structure
Defines any performance-based contingent consideration paid to the seller after closing, tied to the business achieving specific revenue or EBITDA milestones during a defined post-close period. Earnouts are common in e-commerce acquisitions where revenue trends are volatile or where a significant portion of value is tied to the seller's operational involvement during transition.
Example Language
In addition to the base Purchase Price, Seller shall be eligible to receive an earnout payment of up to $[XXX,XXX] ('Earnout'), calculated as [X]% of gross revenue exceeding $[XXX,XXX] generated by the Business during the twelve (12) months immediately following the Closing Date ('Earnout Period'). Buyer shall provide Seller with monthly revenue reports and platform analytics exports within 15 days of each month-end. The Earnout, if earned, shall be paid within 30 days following the conclusion of the Earnout Period.
💡 Sellers should resist earnouts tied to EBITDA or net income in e-commerce acquisitions — buyers have significant control over post-close expenses, including paid advertising spend, platform fees, and headcount, which can suppress reported EBITDA. Gross revenue earnouts are more seller-friendly. Buyers should cap total earnout exposure and include a covenant that the seller cannot solicit the business's suppliers or customers during the earnout period. Both parties should agree on a neutral third-party accountant to resolve earnout disputes.
Included and Excluded Assets
Explicitly lists all assets transferring with the business and excludes any assets the seller retains. In e-commerce acquisitions, the asset schedule must address inventory on hand, in-transit inventory, platform accounts, domain names, email marketing lists, brand trademarks, supplier contracts, and any proprietary product formulations or packaging IP.
Example Language
The transaction shall be structured as an asset purchase. Included assets shall consist of: all branded inventory (on-hand and in-transit as of the Closing Date), Amazon Seller Central account and all associated ASINs and reviews, Shopify storefront and customer database, all domain names and social media handles, registered and pending trademarks, supplier agreements and reorder documentation, standard operating procedures, email and SMS marketing subscriber lists, and all product photography and creative assets. Excluded assets shall include: Seller's personal bank accounts, any outstanding accounts receivable earned prior to Closing, and [list any excluded assets]. Inventory shall be valued separately at Seller's cost basis and paid in addition to the Purchase Price at Closing.
💡 Inventory valuation is one of the most contested issues in e-commerce LOIs. Buyers should insist on a physical or third-party inventory count within 30 days of signing, with aged inventory (older than 12 months) excluded or discounted. Sellers should push to include in-transit inventory valued at cost. Both parties should agree on whether FBA reserve funds and pending Amazon disbursements transfer with the account or are retained by the seller.
Due Diligence Period and Conditions
Establishes the length of the due diligence period, the information the seller must provide, and the conditions under which the buyer may terminate the LOI without penalty. E-commerce due diligence typically takes 45–75 days given the complexity of verifying platform analytics, advertising attribution, supplier relationships, and inventory accuracy.
Example Language
Upon execution of this LOI, Buyer shall have sixty (60) days (the 'Due Diligence Period') to conduct a full investigation of the Business. Seller agrees to provide, within ten (10) business days of signing, access to: (i) three years of profit and loss statements and federal tax returns; (ii) Amazon Seller Central analytics, account health dashboard, and advertising reports; (iii) Shopify analytics and customer cohort reports; (iv) Google Analytics or equivalent traffic data; (v) all supplier agreements and pricing schedules; (vi) inventory reconciliation reports; and (vii) any pending legal claims, platform warnings, or policy violation notices. Buyer may terminate this LOI without penalty at any time during the Due Diligence Period if findings are materially inconsistent with representations made by Seller.
💡 Buyers should request read-only access to Amazon Seller Central and Shopify admin — not just exported reports — to independently verify revenue, review counts, and account health status. Sellers should limit the buyer's ability to contact suppliers or key employees until an NDA and exclusivity are firmly in place. Both parties should define 'material inconsistency' in writing to prevent bad-faith terminations after the buyer has received sensitive operational data.
Exclusivity
Prevents the seller from soliciting or entertaining competing offers during the due diligence period. Exclusivity is a critical protection for buyers who invest significant time and resources verifying platform accounts, supplier relationships, and inventory — and it is one of the only binding provisions in a typical LOI.
Example Language
In consideration of Buyer's commitment to conduct due diligence and incur associated costs, Seller agrees that, for a period of sixty (60) days following the execution of this LOI (the 'Exclusivity Period'), Seller shall not, directly or indirectly, solicit, negotiate, or enter into any agreement with any other party regarding the sale, transfer, or recapitalization of the Business or its material assets. Seller shall immediately notify Buyer if any unsolicited acquisition inquiry is received during the Exclusivity Period.
💡 Sixty days is standard for e-commerce deals with SBA financing involved. If the buyer is pursuing an all-cash acquisition, sellers should push for a shorter 30–45 day exclusivity window. Sellers should include a sunset clause that automatically terminates exclusivity if the buyer fails to submit a definitive term sheet or purchase agreement within the agreed timeline, even if the due diligence period has not expired.
Transition and Training Period
Defines the seller's post-closing obligations to assist the buyer in transitioning platform accounts, supplier relationships, and operational knowledge. This is especially critical in e-commerce where the seller may be the only person with login credentials, supplier contacts, advertising account history, and institutional knowledge of the brand.
Example Language
Following Closing, Seller shall provide Buyer with up to [60–90] days of transition support, not to exceed [20] hours per week, at no additional cost to Buyer. Transition support shall include: transfer of all platform credentials and two-factor authentication controls, introduction to key suppliers and third-party logistics providers, walkthrough of all SOPs, and access to historical advertising account data. Any extended consulting engagement beyond the transition period shall be governed by a separate consulting agreement at a rate of $[XXX] per hour.
💡 Buyers acquiring Amazon FBA businesses should insist on a minimum 60-day transition period given the complexity of account transfer, ASIN ownership documentation, and brand registry re-enrollment. Sellers who plan to start a new business should negotiate a clear boundary on what constitutes 'transition support' versus ongoing consulting to avoid scope creep. Both parties should agree on a communication protocol and escalation path if platform access issues arise post-transfer.
Non-Compete and Non-Solicitation
Restricts the seller from competing with the acquired business or soliciting its customers, suppliers, or employees after closing. In e-commerce, this must be carefully scoped to address specific product categories, marketplaces, and geographies rather than the broad 'online retail' category, which courts may find unenforceable.
Example Language
For a period of [three (3)] years following the Closing Date, Seller shall not, directly or indirectly: (i) own, operate, or have a material financial interest in any business selling [specific product category] through Amazon, Shopify, or any online marketplace in [geographic market]; (ii) solicit the Business's customers, email subscribers, or wholesale accounts; or (iii) solicit, hire, or engage any employee or contractor employed by the Business within the six (6) months prior to Closing. This restriction shall not prevent Seller from working as an employee or independent contractor in an unrelated industry.
💡 A 3-year, category-specific non-compete is standard in lower middle market e-commerce acquisitions. Sellers should resist non-competes broader than the actual product niche of the business being sold — e.g., a seller of pet supplements should not be restricted from ever selling any consumer products online. Buyers should ensure the non-compete covers all platforms where the business currently generates revenue, including Amazon, Walmart Marketplace, and Etsy if applicable.
Confidentiality
Requires both parties to keep the terms of the LOI and all due diligence information confidential. This provision is binding and survives the termination of the LOI. In e-commerce, confidentiality is critical because disclosure of a pending sale can alert Amazon competitors, trigger supplier concerns, or cause key contractors to seek other engagements.
Example Language
Each party agrees to keep the existence, terms, and subject matter of this LOI and all due diligence materials strictly confidential and shall not disclose such information to any third party without the prior written consent of the other party, except to legal counsel, accountants, SBA lenders, and other advisors with a need to know who are bound by equivalent confidentiality obligations. This confidentiality obligation shall survive the termination of this LOI for a period of [two (2)] years.
💡 Sellers should ensure that the buyer's SBA lender, advisors, and any operating partners are individually bound by the NDA before receiving access to platform analytics or supplier lists. Buyers should carve out the right to share due diligence findings with their acquisition financing sources without triggering a confidentiality breach. Both parties should include a remedies clause acknowledging that a breach of confidentiality would cause irreparable harm justifying injunctive relief.
Inventory Valuation and Working Capital Adjustment
Inventory is often the largest variable in e-commerce acquisition pricing and one of the most heavily negotiated LOI terms. Buyers and sellers must agree in the LOI on how inventory will be counted (physical count vs. system reconciliation), which inventory is included (on-hand, in-transit, FBA warehouse), how aged or unsellable inventory is treated, and whether inventory is paid at cost in addition to the goodwill purchase price or included within it. Failure to address this in the LOI leads to significant disputes at closing when actual inventory levels differ from seller representations.
Amazon Account Transfer Mechanism and Risk Allocation
Amazon does not officially permit the transfer of seller accounts, creating legal and practical risk in every Amazon FBA acquisition. The LOI must address how the account will be transferred — whether through entity acquisition, brand registry re-enrollment, or a managed transfer process — and who bears the financial risk if Amazon flags the account, suspends ASINs, or requires review removal during transition. Buyers should negotiate a post-close indemnification from the seller for any account actions arising from pre-close policy violations.
Earnout Metric Definition and Buyer Operational Covenants
In deals with earnout provisions, the specific metric, calculation methodology, and buyer's operational obligations during the earnout period must be negotiated carefully. Sellers should push for gross revenue-based earnouts rather than EBITDA, and for explicit covenants requiring the buyer to maintain minimum advertising spend, product availability, and platform listing activity during the earnout period — preventing the buyer from starving the business of resources to reduce earnout liability.
Seller Note Terms and SBA Standby Requirements
When seller financing is part of the deal structure, the LOI should specify the note amount, interest rate, repayment term, and whether the note will be on full standby per SBA 7(a) requirements. Sellers must understand that a standby note means they will receive no principal or interest payments for typically 24 months post-closing — a significant cash flow implication. Both parties should agree in the LOI on what security the seller will receive for the note, including personal guarantees and any collateral.
Platform Account Health Representations and Pre-Close Indemnification
Sellers must represent in the LOI that their Amazon seller account, Shopify store, and any other marketplace accounts are in good standing with no pending suspensions, policy violations, intellectual property complaints, or review manipulation flags. Buyers should negotiate a right to terminate the LOI without penalty if account health issues are discovered during due diligence, and to receive indemnification for any pre-close violations that surface after closing — including chargebacks, A-to-Z claims, or ASIN removals tied to pre-close inventory.
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Most provisions in an e-commerce LOI are non-binding — including the purchase price, deal structure, and due diligence conditions — meaning either party can walk away before a definitive agreement is signed. However, the exclusivity clause, confidentiality provisions, and any break-up fee provisions are typically drafted as binding and enforceable. This is why sellers should take LOI terms seriously even though the full document is labeled non-binding: the exclusivity period prevents you from marketing to other buyers, and breaching confidentiality carries real legal consequences. Always have an M&A attorney review the LOI before signing.
For e-commerce businesses in the $1M–$5M revenue range, 45–75 days is the industry standard for the due diligence period. SBA-financed deals often require closer to 60–75 days because the lender needs time to underwrite the loan concurrently with the buyer's operational due diligence. All-cash acquisitions can sometimes compress to 30–45 days if the buyer has prior e-commerce operating experience and the seller has organized financials, platform analytics, and supplier documentation ready at signing. Amazon account transfers and brand registry re-enrollments can add complexity that extends timelines beyond initial estimates.
In the vast majority of lower middle market e-commerce acquisitions, inventory is priced separately from the business goodwill and paid at the seller's cost basis at closing. The LOI purchase price should represent the value of the brand, customer relationships, supplier contracts, platform accounts, and cash flow — not the physical inventory. Including inventory in the purchase price creates valuation confusion because inventory levels fluctuate and the seller may have incentive to build inventory artificially before closing. Agree in the LOI that inventory will be counted within 30 days of signing and purchased at verified cost at closing, separate from the stated purchase price.
This is one of the most critical risk scenarios in Amazon FBA acquisitions and the LOI should address it explicitly. If Amazon issues a warning, suspends an ASIN, or initiates an account review during the due diligence period, the buyer should have the contractual right to pause the exclusivity clock, request a full account health audit from the seller, and potentially renegotiate price or terminate without penalty if the issue is material. The seller should represent and warrant in the LOI — and later in the purchase agreement — that the account is in good standing with no pending violations as of the date of signing, with post-close indemnification for pre-close causes.
Yes, but with important constraints. SBA 7(a) loans can be used to finance e-commerce business acquisitions, and earnouts are permissible under SBA guidelines. However, the SBA lender will underwrite the deal based on the base purchase price and demonstrated historical cash flow — they will not give credit for earnout payments in their debt service coverage analysis. If a seller financing note is part of the deal alongside the SBA loan, the SBA will typically require that note to be on full standby for 24 months. Earnout payments made during that standby period may be permissible if structured correctly, but must be reviewed by the SBA lender before the LOI is finalized to avoid compliance issues at closing.
Lower middle market e-commerce businesses are typically valued at 2.5x to 4.5x trailing twelve-month Seller's Discretionary Earnings (SDE) or EBITDA. The specific multiple depends on several value drivers: channel diversification (businesses selling only on Amazon trade at lower multiples than those with diversified DTC, Amazon, and wholesale revenue), repeat purchase rate, brand defensibility and trademark protection, proprietary product formulation or exclusivity agreements, growth trajectory, and owner-dependency. When drafting the LOI, buyers should explicitly state the SDE figure used, the multiple applied, and the trailing period measured — so sellers can validate the math against their own records before the due diligence process begins.
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