Letter of Intent Template for Acquiring a Fireplace & Hearth Services Business

Buyer and Seller Identification

Identifies the legal entities entering into the LOI. For fireplace and hearth acquisitions, confirm whether the buyer is an individual operator, an LLC formed for acquisition, or a home services platform entity. Sellers are often sole proprietors or family-owned S-corps, so confirm the legal structure and whether the deal is an asset purchase or stock purchase — asset purchases are strongly preferred by buyers in this industry given liability exposure from prior service work.

💡 Sellers who operate as sole proprietors may initially resist an asset deal because of potential tax consequences versus a stock sale. Be prepared to discuss the allocation of purchase price across assets — goodwill, customer lists, equipment, and non-compete agreements — and how that allocation affects both parties' tax positions. If the seller has open insurance claims or unresolved code violations, an asset purchase structure is non-negotiable for the buyer.

Purchase Price and Valuation Basis

States the proposed purchase price, the valuation methodology, and how the price was derived. For fireplace and hearth businesses, purchase price is typically expressed as a multiple of adjusted EBITDA, with multiples ranging from 3x to 5x depending on the percentage of revenue from recurring annual maintenance agreements, technician certification depth, and geographic market strength. A business with 40% or more of revenue from signed maintenance contracts will command a higher multiple than one dependent on one-time installation projects.

💡 Sellers who rely heavily on one-time installation projects will push back on lower multiples, arguing that their installation backlog and Google review strength justify a premium. Buyers should be prepared to defend the multiple by showing the seller how the valuation compares to transactions with higher recurring revenue percentages. If the business has strong installation revenue but thin maintenance contracts, consider proposing a tiered earnout that rewards the seller if they help the buyer convert existing customers to maintenance agreements during the transition period.

Deal Structure and Payment Terms

Outlines how the purchase price will be funded, including the allocation between SBA financing, buyer equity injection, seller note, and any earnout component. Fireplace and hearth acquisitions are SBA 7(a) eligible and commonly structured with an SBA loan covering 80–90% of the purchase price, a 10–20% buyer equity injection, and a seller note of 10–20% over 3–5 years. Earnouts tied to maintenance contract retention or technician continuity are increasingly common.

💡 The seller note is a meaningful negotiating lever. Sellers want the note paid quickly with no conditions; buyers want it tied to business performance. A compromise is to structure the first 12 months of seller note payments as unconditional, with the remaining balance subject to offset rights if material misrepresentations are discovered post-close, such as undisclosed liability claims or customer count inflation. If the SBA lender requires the seller note to be on full standby for 24 months, address this early in negotiations so the seller understands the timeline before signing.

Exclusivity and No-Shop Period

Prevents the seller from soliciting or entertaining competing offers during the due diligence period. For fireplace and hearth acquisitions, a 60–90 day exclusivity window is standard, given the complexity of verifying maintenance agreement contracts, technician certifications, and liability history. Sellers may resist long exclusivity periods, particularly if they are working with a business broker who has multiple interested buyers.

💡 If the seller insists on a shorter exclusivity window — say 45 days — consider negotiating a 30-day extension right triggered by submission of an SBA loan application. For fireplace businesses, due diligence is legitimately more complex than a typical service business because you need to verify certification credentials with CSIA and NFI registries, review insurance claim histories, inspect equipment inventories, and assess the quality of maintenance agreement documentation. Budget your time accordingly and do not agree to an exclusivity window you cannot realistically use.

Due Diligence Scope and Access

Specifies what information the buyer will require access to during the due diligence period and the seller's obligations to provide it. For fireplace and hearth acquisitions, due diligence must cover financial records, maintenance agreement contracts, technician certifications, insurance and liability history, supplier dealer agreements, and customer database integrity.

💡 Sellers often underestimate how much documentation buyers need. Many owner-operated fireplace businesses have never had to produce a complete maintenance agreement roster or a formal insurance claims summary. Build extra time into the exclusivity period for document collection, and offer to have your CPA or advisor help the seller organize materials if needed — this goodwill investment often accelerates the process and surfaces issues earlier. Pay particular attention to whether maintenance agreements are actually signed by customers or merely informal understandings, as unsigned agreements have minimal transferable value.

Conditions to Closing

Lists the specific conditions that must be satisfied before the buyer is obligated to close the transaction. For fireplace and hearth acquisitions, conditions should include SBA loan approval, satisfactory due diligence findings on liability history and technician certifications, key employee retention agreements, and landlord consent if the business operates from a leased facility.

💡 The technician certification condition is a hard line for most buyers — do not waive it. If the owner is the only CSIA-certified technician in the business, this must be disclosed and addressed before the LOI is signed, not discovered during due diligence. Sellers sometimes argue that their technicians can get certified post-close, but this creates real operational and liability risk during the transition. Consider making technician certification a pre-closing condition with a specified deadline, and build a cost-sharing arrangement for exam fees into the deal if needed to motivate the seller to get technicians credentialed before close.

Transition and Training Obligations

Defines the seller's obligations to support the buyer during the post-closing transition period, including customer introductions, technician supervision, supplier relationship handoffs, and operational knowledge transfer. This section is particularly important in fireplace and hearth acquisitions where the seller often has deep personal relationships with referral partners such as builders, real estate agents, and HVAC contractors.

💡 Sellers in this industry often want to exit quickly after decades of running the business, which is understandable — but a rushed transition in a safety-critical service business is genuinely risky. Frame the transition period as protecting the seller's legacy and ensuring customers are well-served, not as a burden. If the seller is resistant to a long transition, consider front-loading the most critical activities — customer introductions and referral partner handoffs — into the first 30 days and making the remaining period more flexible. Tying a portion of the seller note to satisfactory completion of transition obligations can provide useful motivation.

Non-Competition and Non-Solicitation

Restricts the seller from competing with the acquired business or soliciting its customers and employees after the transaction closes. In the fireplace and hearth services industry, where the seller's personal reputation and customer relationships are core business assets, a well-structured non-compete is essential to protect the buyer's investment.

💡 Courts generally enforce non-competes tied to business sales more readily than employment-based non-competes, but the scope must be reasonable. A 50-mile radius and 5-year term is defensible in most jurisdictions for a fireplace services business with a defined geographic trade area. Watch for sellers who want carve-outs to do 'a few jobs for old friends' — even informal side work can poach recurring maintenance customers and undermine the value of the maintenance agreement portfolio you just paid for.

Confidentiality

Obligates both parties to maintain the confidentiality of deal terms, financial information, and customer data shared during the LOI and due diligence process. This is especially important in tight-knit local markets where the sale of a well-known fireplace business can affect customer confidence and employee retention if disclosed prematurely.

💡 In small trade-area markets, word of a potential sale travels fast. A premature disclosure can cause technicians to update their resumes, referral partners to diversify their recommendations, and customers to delay signing maintenance agreements — all of which directly harm deal value. Make confidentiality a priority from the very first conversation and confirm that the seller's broker, if any, has a strict protocol for managing inquiries.

Binding and Non-Binding Provisions

Clearly distinguishes which sections of the LOI are legally binding and which are non-binding expressions of intent. In fireplace and hearth acquisitions, the binding provisions typically include exclusivity, confidentiality, and governing law, while the purchase price, deal structure, and conditions to closing are non-binding until a definitive Purchase Agreement is executed.

💡 Do not skip the binding/non-binding distinction in the LOI, even in friendly seller relationships. Disputes over whether an LOI created an enforceable obligation are expensive and damaging to deals. Clearly label every section. If either party wants to make the purchase price binding as a price floor or ceiling, that is unusual at the LOI stage and should be resisted unless accompanied by a full deposit or break-up fee structure.