Letter of Intent Template for Acquiring a Floral Design Business

Parties and Business Description

Identify the buyer entity, the seller, and the specific business being acquired. For floral businesses this should include the legal name of the shop or studio, its primary operating address, and a brief description of revenue mix — retail walk-in, wedding and event contracts, corporate accounts, and any e-commerce or delivery operations.

💡 Be specific about what is included in 'the Business.' If the seller operates from multiple locations or runs a separate wholesale supply arrangement, clarify upfront whether those operations are included or excluded. Ambiguity here creates expensive disputes later in the purchase agreement.

Purchase Price and Valuation Basis

State the proposed total purchase price and the basis for that valuation. Floral design businesses typically trade at 2x to 3.5x EBITDA, with the higher end reserved for businesses with strong recurring corporate accounts, diversified revenue, and low owner dependency. Include any adjustments for working capital or perishable inventory at close.

💡 Push for a clear definition of EBITDA addbacks specific to floral operations — owner's personal vehicle used for deliveries, above-market owner compensation, and one-time equipment purchases are common in this industry. Perishable inventory is almost never valued at retail; negotiate to exclude it entirely or purchase it at verified wholesale cost only.

Deal Structure and Payment Terms

Outline how the purchase price will be funded, including the SBA loan portion, seller financing, earnout provisions, and any equity rollover. Floral deals commonly use SBA 7(a) financing for the majority of the purchase, with seller financing covering 10–20% as required by lenders, and earnout provisions tied to corporate account or wedding contract retention.

💡 Earnouts in floral acquisitions are most commonly tied to corporate account retention or total wedding contract volume — not gross revenue, which can be inflated by one large event. Define retention thresholds clearly and tie measurement to verifiable POS or booking system data. Sellers should negotiate a cap on earnout measurement periods and ensure they retain meaningful influence over client relationships during any transition.

Assets Included and Excluded

Specify what tangible and intangible assets transfer with the sale. Floral acquisitions involve a distinct mix of physical assets — coolers, delivery vehicles, design tools, fixtures — and intangible assets including the brand name, client database, supplier relationships, social media accounts, and booked event contracts.

💡 The client database and booked wedding contracts are often the most valuable assets in a floral acquisition — make sure they are explicitly listed and that any contracts requiring client consent to transfer are identified during due diligence. Wholesale supplier agreements may not be automatically assignable; confirm this with key vendors before closing.

Due Diligence Period and Access

Define the length of the due diligence period and the access the buyer requires. Floral business due diligence should cover financial records, POS system data, supplier contracts, lease terms, employee records, and the seasonal revenue patterns that define cash flow in this industry.

💡 Request monthly revenue data broken down by category — retail walk-in, weddings, corporate, sympathy — for at least three full years. This is the only way to properly assess seasonality risk and validate that Valentine's Day and Mother's Day spikes are not masking weak baseline revenue. Ask to review the wedding booking pipeline directly in whatever software the business uses, such as HoneyBook or Aisle Planner.

Exclusivity and No-Shop Period

Establish that the seller will not market the business to or negotiate with other buyers during the due diligence period. This protects the buyer's investment of time and professional fees while due diligence is underway.

💡 Forty-five days is standard for a business of this size and complexity. If due diligence reveals issues requiring additional investigation — such as an undisclosed lease renewal risk or a top designer's departure — negotiate a 10–15 day extension option in the LOI rather than renegotiating exclusivity under pressure later.

Seller Transition and Non-Compete

Define the seller's post-close role, transition period length, and geographic and time-bound non-compete obligations. In floral design, where owner relationships with brides, corporate event planners, and wholesale vendors are central to revenue retention, this section is especially consequential.

💡 A 90-day transition is the minimum for a relationship-intensive business like floral design; 180 days is preferable when the seller holds key corporate or hotel account relationships. The non-compete radius and duration should reflect the actual competitive geography — a 25-mile radius is typical for a metro-area floral studio but may need expansion for a business with a regional wedding footprint.

Confidentiality

Confirm that both parties will keep the terms of the LOI and all due diligence materials strictly confidential. In a local floral business, news of a pending sale can trigger staff departures, client anxiety, and supplier concern before the deal closes.

💡 Confidentiality is especially critical in smaller floral markets where word travels fast. Consider adding specific language about how staff will be notified — most buyers prefer to delay staff communication until a purchase agreement is signed and financing is confirmed to avoid premature departures by key designers.

Binding vs. Non-Binding Provisions

Clarify which sections of the LOI are legally binding and which are expressions of intent. Standard practice is for most economic and structural terms to be non-binding, while exclusivity, confidentiality, and governing law are binding on both parties.

💡 Do not skip this section. In a contested deal, sellers have occasionally argued that LOI purchase price terms were binding. Be explicit. Your attorney should review the binding provisions before signing to ensure the exclusivity and confidentiality clauses are enforceable under your state's law.

Conditions to Closing

Outline the key conditions that must be satisfied before closing can occur, including financing approval, satisfactory due diligence, lease assignment or renewal, and any third-party consents required for supplier or contract transfers.

💡 The lease assignment condition is non-negotiable for most floral retail operations — a business tied to a high-traffic location with only 12 months remaining on the lease carries significant risk. Confirm with the landlord early in due diligence whether they will grant a new term or assignment. SBA lenders will also require adequate lease terms, so this needs to move in parallel with financing.