Letter of Intent Template for Acquiring a Limousine & Executive Car Service Business

Parties and Business Identification

Identifies the buyer entity, seller entity, and the specific business being acquired. In limousine transactions, it is important to clarify whether the buyer is acquiring the operating entity or a newly formed acquisition vehicle, and to name the DBA, operating licenses, and fleet registration entity if they differ from the legal seller entity.

💡 Confirm the exact legal entity holding the fleet titles, operating licenses, and corporate account contracts. In many owner-operated limousine businesses, vehicles are titled to a separate LLC or personal name. This must be resolved before the LOI is signed to avoid complications in the asset schedule and SBA lender title requirements.

Purchase Price and Valuation Basis

States the proposed total purchase price and the methodology used to arrive at it, typically a multiple of Seller's Discretionary Earnings (SDE) or EBITDA adjusted for owner add-backs. Limousine businesses typically trade at 2.5x–4.5x EBITDA depending on fleet quality, account diversification, and technology infrastructure.

💡 Push sellers to provide at least 3 years of tax returns and a trailing twelve-month P&L before the LOI is signed. Many limousine owners run personal vehicle expenses, fuel cards, or family member payroll through the business. Document all add-backs explicitly in a schedule attached to the LOI to prevent valuation disputes later. If the seller cannot substantiate EBITDA above $150K–$200K, SBA financing will be difficult to obtain.

Asset Purchase Structure and Included Assets

Defines whether the transaction is structured as an asset purchase or stock purchase and enumerates the categories of assets being acquired. For limousine businesses, this section must specifically list fleet vehicles, transferable operating licenses, customer contracts, dispatch software licenses, brand assets, and driver agreements.

💡 Do not leave vehicle schedules vague. Require the seller to produce a complete fleet inventory with mileage, maintenance logs, and current blue book or NADA values before the LOI is executed. Aging vehicles with deferred maintenance are one of the most common sources of post-close buyer regret in this industry. If the seller leases dispatch or GPS software, confirm whether those licenses are assignable or whether you will need to migrate to a new platform at your cost.

Purchase Price Allocation and SBA Financing Contingency

Outlines how the purchase price will be allocated among asset classes for tax purposes and confirms the buyer's intent to seek SBA 7(a) financing. This section also specifies the seller's willingness to carry a portion of the purchase price as a subordinated seller note, typically required by SBA lenders.

💡 SBA lenders will scrutinize fleet asset values closely and may order independent appraisals on vehicles. Allocate conservatively to vehicles because lenders will lend against appraised value, not seller's asking price. Sellers sometimes resist the seller note requirement; frame it as an alignment mechanism — if the business performs as represented, their note gets paid. An earnout tied to client retention is an alternative or complement to a seller note when account transfer risk is high.

Earnout Provision for Corporate Account Retention

Establishes a contingent payment mechanism tied to the retention of key corporate accounts following closing. This is especially important in limousine acquisitions where one or two accounts may represent 30–50% of total revenue, creating meaningful post-close revenue risk.

💡 Define 'retention' carefully — revenue retention is more meaningful than account count. A corporate account that downsizes from $80K to $20K annually should not count as a fully retained account. Cap the earnout period at 18–24 months maximum and require the seller to sign a cooperation covenant requiring active participation in client introductions. If the top three accounts represent more than 40% of revenue, consider reducing the base purchase price and increasing the earnout ceiling proportionally.

Due Diligence Period and Access Rights

Specifies the length of the due diligence period, the categories of information the buyer has the right to inspect, and the seller's obligation to provide timely and complete access to business records, fleet, staff, and technology systems.

💡 Fleet inspection by an independent mechanic is non-negotiable in this industry. Budget $75–$150 per vehicle for pre-purchase inspections and factor findings into your price adjustment strategy. Driver classification is a hot-button issue — if the seller uses 1099 independent contractors, have your attorney assess misclassification exposure given DOL and state-level enforcement trends. Request the insurance claims history in writing from the carrier, not just the seller's summary.

Exclusivity and No-Shop Provision

Prevents the seller from marketing the business to other buyers or entertaining competing offers during the due diligence period in exchange for the buyer's commitment of time and resources.

💡 Sellers with multiple interested parties may resist exclusivity longer than 30 days. A reasonable compromise is a 30-day initial exclusivity period with an automatic 15-day extension if due diligence is progressing in good faith. If the seller insists on keeping the process open, consider whether the deal is truly under LOI or still in a competitive bid process — and adjust your leverage accordingly.

Seller Transition and Non-Compete Agreement

Defines the seller's post-closing role in the business, the duration of the transition period, compensation arrangements during transition, and the geographic and temporal scope of the non-compete covenant.

💡 In limousine businesses where the owner is the primary dispatcher and key client relationship manager, the transition period is critical. A 6-month minimum is standard; push for 12 months if the seller personally manages more than 30% of the revenue-generating accounts. Allocate meaningful value to the non-compete in the purchase price schedule — this makes the covenant more legally defensible and provides a tax benefit to the seller as ordinary income versus capital gains treatment.

Confidentiality and Binding Nature of LOI

Clarifies which provisions of the LOI are legally binding on both parties and which are expressions of intent only, and reaffirms the parties' confidentiality obligations regarding the transaction and shared business information.

💡 Make sure your NDA was executed before any financial data was shared — if not, include a retrospective confidentiality clause in the LOI covering all prior exchanges. Sellers in small limousine businesses are often unfamiliar with M&A process and may not understand that the LOI is non-binding on price and structure. A brief explanation from your advisor at the time of LOI signing prevents misunderstandings and maintains goodwill during due diligence.