Letter of Intent Template for Acquiring a Holiday Lighting Installation Business

Parties and Transaction Overview

Identifies the buyer and seller legal entities, the target business, and confirms whether the deal is structured as an asset purchase or equity purchase. The vast majority of holiday lighting deals are structured as asset purchases to allow buyers to cherry-pick customer contracts, inventory, and routes while leaving behind unknown liabilities.

💡 Confirm upfront whether the seller holds assets personally or inside a business entity — many holiday lighting owners operate as sole proprietors or single-member LLCs with informal asset ownership. Identifying this early prevents title transfer complications on inventory, trailers, and vehicles at closing.

Purchase Price and Consideration Structure

States the total proposed purchase price, how it is allocated across cash at close, a seller note, and any earnout tied to post-close performance. Holiday lighting businesses commonly trade at 2.5x–4.5x adjusted EBITDA. Given revenue seasonality, buyers should anchor valuation to trailing twelve months (TTM) EBITDA normalized for owner compensation and any personal expenses run through the business.

💡 Sellers will resist large earnouts because they feel like deferred price risk on a business they no longer control. Frame the earnout as downside protection for the buyer, not a discount on value. A re-sign rate threshold of 75–80% of the prior season's customer base is a reasonable earnout trigger. Keep the earnout period to one operating season — multi-year earnouts create conflict and drag on both parties.

Earnout Provisions

Defines the specific conditions under which the earnout is paid, including re-sign rate thresholds, minimum revenue benchmarks, and the timeframe for measurement. This is the most negotiated section in a holiday lighting LOI because re-sign rates are the single best proxy for recurring revenue quality.

💡 Define 're-sign rate' explicitly — disputes arise when sellers argue a customer 'would have re-signed' but the buyer changed pricing or service areas. Exclude accounts lost due to buyer-initiated price increases from the re-sign calculation to avoid perverse incentives. Also specify that the seller's cooperation during the transition season is a condition of earnout eligibility.

Inventory and Equipment Treatment

Addresses the ownership, valuation, and transfer of company-owned light inventory — the most significant tangible asset in a holiday lighting acquisition. Inventory deployed on customer properties at the time of close must be inventoried by location and customer account to ensure a clean handoff.

💡 Insist on a physical inventory count before signing a binding purchase agreement — sellers frequently overestimate inventory value because aging lights are carried at original cost on informal records. Pay particular attention to inventory stored off-site in rented storage units and lights currently installed on customer properties in the off-season. Also confirm whether any inventory is subject to lease or financing arrangements that must be paid off at close.

Customer Contracts and Non-Solicitation

Addresses the assignment of customer service agreements to the buyer and the seller's commitment not to solicit or re-engage those customers post-close. In holiday lighting, customer relationships are the core of the business, and many are informal — the LOI should require formalization of agreements before close.

💡 Customer re-sign rates are the most sensitive post-close risk in a holiday lighting acquisition. A 3–5 year non-compete is standard and defensible in this industry because the business is entirely relationship-driven. Push for a specific covenant requiring the seller to send a signed letter of introduction to all active customers on or before [Date] — this single action materially improves customer retention post-close.

Seller Transition and Consulting Arrangement

Defines the seller's ongoing role post-close, which is especially critical in a seasonal business where operational knowledge of routing, crew management, and customer preferences is concentrated in the owner. Many holiday lighting deals include a paid consulting arrangement for the first 1–2 active seasons.

💡 Sellers often want to minimize their post-close involvement, especially if they are retiring. Be direct about what operational knowledge is at risk if the seller disengages — most sellers will cooperate once they understand that their earnout depends on a successful first season. Cap the consulting requirement at one full season; two seasons is rarely necessary if due diligence is thorough and the buyer is an experienced operator.

Due Diligence Period and Exclusivity

Grants the buyer an exclusive due diligence window during which the seller cannot solicit or accept competing offers. In a seasonal business, timing the LOI relative to the active season is critical — diligence conducted in February through May allows full access to prior-season records and time to prepare for the upcoming season.

💡 A 45–60 day exclusivity window is standard and appropriate for a business in this revenue range. Do not sign an LOI without exclusivity — holiday lighting sellers sometimes receive multiple inquiries from landscapers and adjacent service buyers, and competing offers during diligence will inflate price expectations. If the seller resists exclusivity, treat it as a red flag about their commitment to the deal.

Conditions to Closing

Lists the specific conditions that must be satisfied before the transaction can close, including financing approval, satisfactory due diligence, assignment of key contracts, and execution of the non-compete.

💡 Add a condition requiring the seller to maintain normal business operations through closing — sellers who are mentally checked out may underservice customers, skip early-season outreach, or lose crew members between LOI and close. A material adverse change clause covering loss of more than [10]% of prior-season revenue accounts before closing is worth including even in a short-form LOI.

Good Faith Deposit

Specifies a refundable or partially refundable earnest money deposit paid by the buyer upon LOI execution to demonstrate serious intent and compensate the seller for exclusivity granted during diligence.

💡 A $10,000–$25,000 deposit is appropriate for deals in the $500K–$2M range. Sellers in this industry are often unsophisticated about deal process and may conflate the deposit with a binding commitment — clarify explicitly in the LOI that it is refundable under the specified conditions and that the LOI itself is non-binding except for the exclusivity and confidentiality provisions.

Confidentiality

Requires both parties to keep the terms of the LOI and any information exchanged during diligence confidential, protecting the seller's customer list, pricing, and employee relationships from disclosure to competitors.

💡 Confidentiality is especially important in local holiday lighting markets where customer lists represent years of relationship-building and word-of-mouth referrals. If the buyer is a local competitor or operates in the same market, consider whether a separate NDA with a shorter information-sharing scope is appropriate before sharing customer-level data.