Letter of Intent Template for Acquiring a Meal Prep & Delivery Service

Buyer and Seller Identification

Clearly identify the acquiring entity (buyer) and the selling entity or individual (seller), including the legal business name, entity type, and state of formation. For meal prep businesses, confirm whether the seller is an individual owner-operator, an LLC, or a corporation, as this affects license transferability and SBA eligibility.

💡 Verify that the entity named on the commercial kitchen lease, health department permit, and supplier contracts matches the selling entity. Mismatches are common in owner-operated meal prep businesses and must be resolved before closing. If the seller operates under a beloved local brand name, explicitly include the trade name, social media handles, and customer-facing domain in the asset schedule.

Purchase Price and Valuation Basis

State the proposed total purchase price, the SDE multiple applied, and the trailing earnings period used to derive the valuation. Meal prep businesses are valued on Seller's Discretionary Earnings (SDE), which should be clearly defined and agreed upon before the LOI is signed.

💡 Expect sellers to present high add-back figures for personal vehicle use, family salaries, and owner health insurance — all common in meal prep businesses. Scrutinize any add-backs for costs that a new owner would actually incur, such as a paid kitchen manager to replace the selling owner's labor. Negotiate the right to re-price the deal if verified SDE falls more than 10–15% below the seller's represented figure. For businesses with strong subscription retention, a multiple at the higher end of the 2.5x–4.5x range is defensible.

Deal Structure and Financing

Outline how the purchase will be funded, including the proposed SBA loan amount, buyer equity injection, and any seller note or earnout. SBA 7(a) financing is widely available for meal prep businesses meeting minimum criteria, but lender approval depends heavily on documented recurring revenue.

💡 SBA lenders will require at least 2 years of clean tax returns and may apply a haircut to subscription revenue that is not under multi-month contracts. Position the seller note as both an alignment mechanism and a lender confidence signal — SBA lenders view seller participation favorably. If the business relies heavily on one-time or seasonal corporate catering orders, expect the lender to underwrite at a lower revenue base than the seller prefers.

Earnout Tied to Subscriber Retention

Define the earnout structure tied to post-close recurring subscriber performance, which is the most critical risk-mitigation mechanism in meal prep acquisitions. The earnout protects the buyer if churn accelerates following ownership transition.

💡 Sellers will resist earnouts that feel punitive or that they perceive as reducing their guaranteed payout. Frame the earnout as upside — a way for sellers to capture additional value if their loyal customer base stays with the new owner. Negotiate a clear, auditable definition of 'active subscriber' tied to billing records, not self-reported customer counts. Consider capping the earnout measurement period at 12 months rather than 24, as 24-month earnouts often create disputes and relationship friction.

Assets Included in the Sale

Enumerate all assets being transferred, including tangible equipment, intellectual property, customer data, contracts, and licenses. For meal prep businesses, the completeness of this section directly determines what the buyer is actually receiving.

💡 Pay close attention to whether health department licenses are issued to the entity or the individual — in many states, these must be reapplied for rather than transferred. Negotiate a specific closing condition requiring all material licenses to be confirmed transferable or reissuable before the purchase price becomes binding. Recipes and SOPs should be specifically listed and physically delivered in escrow before close, not promised verbally.

Excluded Assets and Liabilities

Specify what the seller is retaining and which liabilities will not transfer to the buyer. Most meal prep acquisitions are structured as asset purchases, meaning the buyer assumes only specifically identified liabilities.

💡 Sellers often ask buyers to assume accounts payable to reduce the cash they need at closing. Resist assuming pre-close payables unless they are clearly quantified and discounted from the purchase price. Any pending health department violations or food safety incidents must be explicitly excluded as buyer liabilities and resolved by the seller prior to close.

Due Diligence Period and Access

Define the due diligence timeline, the categories of information to be provided, and the conditions under which the buyer may terminate based on findings. Meal prep acquisitions require specialized diligence covering subscription analytics, food safety compliance, and logistics infrastructure.

💡 Forty-five to sixty days is appropriate for a meal prep business in the $1M–$5M revenue range. Shorter periods favor sellers but increase buyer risk — push back on any seller insisting on 30-day diligence windows for businesses with complex subscription data. Require subscriber cohort analysis in a structured format (e.g., monthly vintage cohorts) rather than accepting a single aggregate churn number, which can obscure deteriorating retention trends.

Commercial Kitchen Lease and Facility Continuity

Address the assignment or assumption of the commercial kitchen lease as a specific closing condition, given that the kitchen is the operational backbone of any meal prep business.

💡 This is frequently the single most deal-critical item in a meal prep acquisition. Many kitchen leases in this sector are month-to-month or contain personal guarantee provisions that do not transfer. Verify remaining lease term before submitting the LOI — a business with less than 12 months on the kitchen lease is a material risk that should either reduce the purchase price or trigger re-negotiation of the lease before closing.

Seller Transition and Non-Compete

Define the seller's post-close role, transition support obligations, and restrictions on competitive activity. In owner-operated meal prep businesses, the seller's knowledge of recipes, supplier relationships, and key customer accounts is often the most valuable intangible being acquired.

💡 Ninety days of transition support is the industry standard for heavily owner-dependent meal prep businesses — do not accept less than 60 days for any business where the owner manages recipes, customer relationships, and supplier negotiations personally. A 3-year, 50-mile non-compete is reasonable and defensible in court for this industry. Sellers will often try to negotiate the radius down or carve out catering activity — resist carve-outs that allow them to directly contact your acquired subscriber base.

Exclusivity and No-Shop Provision

Establish that the seller will not solicit or entertain competing offers during the due diligence period, providing the buyer with protected time to complete diligence and negotiate a purchase agreement.

💡 Sellers with multiple interested buyers may push back on exclusivity periods longer than 30 days. A 45-day exclusivity period aligned with the due diligence window is the recommended baseline. If the seller insists on a shorter period, negotiate the right to extend exclusivity by 15 days upon payment of a non-refundable deposit of $10,000–$25,000 that applies toward the purchase price at closing.

Conditions to Closing

List the specific conditions that must be satisfied before the transaction can close, protecting the buyer from being obligated to proceed if critical business facts cannot be confirmed.

💡 The 'no material adverse change' condition for subscriber counts is especially important — sellers may be tempted to reduce promotional spending or delay addressing churn during the LOI period to preserve cash. Define 'material adverse change' numerically (e.g., a decline of more than 8% in active subscribers from the most recently reported month) to avoid ambiguity at closing.

Confidentiality and Non-Disclosure

Confirm that the parties' existing NDA governs information shared during the LOI and due diligence process, and that the LOI itself is confidential.

💡 Confirm that a signed NDA is in place before sharing any subscriber cohort data or CRM records. Meal prep customer lists and subscription data are highly sensitive competitive assets — inadvertent disclosure to a competitor or to employees before closing can cause significant customer disruption. Ensure the NDA covers oral disclosures in addition to written materials.