Letter of Intent Template for Acquiring a Freight Brokerage Business

1. Parties and Transaction Structure

Identifies the acquiring entity and the selling entity with precision, and establishes whether the deal is structured as an asset purchase or stock purchase. This distinction is particularly consequential in freight brokerage because the FMCSA broker authority, surety bond, and carrier contracts are tied to the legal entity holding the operating license.

💡 Sellers typically prefer a stock sale to preserve capital gains tax treatment and avoid triggering customer notification requirements. Buyers almost always prefer an asset purchase to avoid inheriting freight claims liability, regulatory violations, or undisclosed carrier disputes. In freight brokerage specifically, negotiate which entity will carry the broker authority post-close, and clarify who bears the cost and timeline of transferring or re-establishing FMCSA authority. If the Seller's authority is being transferred, confirm bond continuity so carrier payments are not disrupted during the transition.

2. Purchase Price and Valuation Basis

States the proposed purchase price and — critically in freight brokerage — defines exactly what financial metric the valuation multiple is applied to. Freight brokerage valuations are always based on net revenue (gross revenue minus carrier costs), and failure to define this precisely in the LOI leads to valuation disputes during diligence when gross revenue numbers are used to anchor the seller's expectations.

💡 This is the highest-stakes clause in a freight brokerage LOI. Sellers often market their business using gross revenue figures — a $10M gross revenue brokerage may only have $2M in net revenue, which is the actual valuation basis. Establish the net revenue definition in the LOI before any multiple is discussed. Buyers should also request the Seller confirm the trailing EBITDA figure excludes one-time items such as PPP loan forgiveness, pandemic-era spot market windfalls, or owner personal expenses run through the business. A quality of earnings engagement should be budgeted from the outset.

3. Earnout Structure and Shipper Retention Milestones

Defines any contingent consideration tied to post-close performance, which is standard in freight brokerage deals where a significant portion of business value depends on shipper account retention and net revenue continuity after the owner transitions out.

💡 Sellers should push for earnout metrics tied to gross margin dollars from retained accounts rather than EBITDA, since buyers can influence EBITDA through overhead allocation post-close. Buyers should ensure the earnout is capped and defined around specific named accounts — not general revenue targets — so a new shipper win cannot mask the loss of a major legacy account. Both parties should agree upfront on the data source (TMS reports, not manual summaries) and dispute resolution mechanism. Avoid earnout structures with more than two measurement periods in freight brokerage — freight market cycles make three-year earnouts nearly unenforceable.

4. Due Diligence Scope and Access

Establishes the due diligence period, the specific categories of information the Buyer requires, and the Seller's obligations to provide access to financial records, customer data, carrier compliance files, and technology systems.

💡 Sixty days is appropriate for freight brokerages with clean records; request ninety days if the Seller is presenting manually prepared financials or lacks a modern TMS. Insist on direct TMS access rather than seller-prepared exports — load data can be manipulated in spreadsheets but not in the source system. The carrier compliance review is non-negotiable; acquiring a brokerage whose carrier database contains uncertified or lapsed carriers creates post-close liability for cargo claims. If the Seller resists providing customer contact information before exclusivity, negotiate a tiered disclosure approach where top 10 shipper names (without contacts) are disclosed at LOI, and full contact data is released only after a signed NDA and earnest money deposit.

5. Exclusivity and No-Shop Provision

Grants the Buyer an exclusive negotiating window during which the Seller agrees not to solicit, entertain, or advance discussions with other potential acquirers.

💡 Sellers in freight brokerage deals often resist long exclusivity windows because business value can decay quickly if key shippers or sales agents become aware of a sale process. Buyers should request 60 days minimum but should also move quickly — a 90-day exclusive that sits idle for 45 days while the buyer organizes financing is as damaging as no exclusivity at all. Consider pairing the exclusivity provision with a milestone schedule: SBA lender engagement by Day 10, QoE report delivered by Day 30, purchase agreement draft by Day 45.

6. Key Employee and Owner Transition Covenants

Addresses the terms of the owner's post-close involvement, the retention of key account managers or sales staff, and the non-compete and non-solicitation obligations that protect the acquired shipper relationships and carrier network.

💡 This is the clause that determines whether a freight brokerage acquisition succeeds or fails. In owner-operated brokerages, the owner IS the carrier relationships and the reason top shippers stay. A 30-day transition is insufficient — negotiate 12 to 18 months with a consulting structure that includes active account introductions, not just email announcements. Non-competes in freight brokerage are hard to enforce geographically because the industry is national by nature; structure them around specific customer non-solicitation rather than broad geography. Fund key employee retention bonuses at closing, not contingently, to ensure the sales team does not defect during the transition.

7. Working Capital Peg and Accounts Receivable Treatment

Establishes the working capital target at closing and clarifies the treatment of accounts receivable, carrier payables, and any outstanding freight claims, which in brokerage deals can represent significant current liabilities.

💡 Working capital in freight brokerage is volatile because carrier payables and shipper receivables move on 30–45 day cycles and freight claim reserves are often undisclosed or underestimated. Buyers should obtain a full aging schedule of both receivables and payables as part of diligence and negotiate a claims reserve funded at closing. Sellers should push to exclude spot market receivables from high-volatility periods from the working capital peg if they are anomalous. The 90-day AR collection window protects both parties — Buyer gets clean operating cash flow, Seller retains responsibility for aged or disputed invoices.

8. Conditions to Closing

Lists the specific conditions that must be satisfied before the transaction can close, including financing contingencies, regulatory approvals, and the absence of material adverse changes in the business.

💡 Define 'material adverse change' with specificity in freight brokerage — a soft freight market that reduces spot revenue by 15% is different from losing a shipper that represents 25% of net revenue. Sellers should push to narrow MAC clauses to customer-specific events rather than broad market conditions. For SBA-financed deals, build in a 90-day financing contingency but agree to a specific lender engagement timeline so the contingency does not become a de facto indefinite opt-out for the buyer. The non-solicitation delivery from key employees as a closing condition protects the buyer from post-LOI defection risk.

9. Confidentiality and Information Control

Establishes mutual obligations to maintain confidentiality of deal terms, business information, and personnel matters, with particular attention to the risk of employee or shipper awareness of the sale process disrupting operations.

💡 Confidentiality management is unusually critical in freight brokerage because shipper loyalty is relationship-driven, not contractual. If a major shipper learns their freight broker is being sold, they may immediately begin qualifying alternative brokers as a risk mitigation measure. Both parties should agree on a communication plan for employees and customers before closing, not after. Buyers who conduct cold outreach to the Seller's shippers during diligence without permission are not only violating the LOI but are actively damaging the asset they intend to purchase.

10. Binding vs. Non-Binding Provisions

Clarifies which sections of the LOI are legally binding on both parties and which represent non-binding statements of intent subject to definitive agreement.

💡 Keep the binding section narrow. The only provisions that should be binding at LOI stage in a freight brokerage deal are exclusivity and confidentiality. Sellers who agree to binding purchase price terms before diligence is complete are exposed to downward adjustments they cannot legally resist. Buyers who make binding representations about financing at the LOI stage before SBA approval is confirmed create legal exposure. Reserve all economic terms for the definitive purchase agreement after quality of earnings and carrier compliance diligence are complete.