Letter of Intent Template for Acquiring a Microblading & PMU Studio

Parties and Studio Identification

Clearly identify the buyer entity, the seller, and the specific business assets or entity being acquired. For PMU studios, this section should name the legal entity (LLC or sole proprietorship), the DBA trade name used in client-facing marketing, and the physical studio address subject to the health department operating permit.

💡 Confirm whether the transaction will be structured as an asset purchase or entity purchase before identifying the parties. For most microblading studios, buyers prefer an asset purchase to avoid inheriting unknown liabilities, including any prior health department citations or unlicensed practice exposure. If the seller operates under a recognizable trade name with strong social media equity, ensure the trade name and all associated social media handles are listed as included assets in this section.

Purchase Price and Valuation Basis

State the proposed purchase price, the valuation methodology used to arrive at it, and how the price will be allocated across tangible assets, goodwill, and non-compete covenants. PMU studios in the lower middle market typically transact at 2x–3.5x seller's discretionary earnings, with price adjusted downward for high owner revenue concentration.

💡 If the owner-artist generates more than 50% of studio revenue personally, negotiate a lower upfront multiple (closer to 2x SDE) and use an earnout to bridge the valuation gap. Sellers will often push for 3x–3.5x citing their social media following and reputation; buyers should counter by quantifying revenue concentration risk. Allocating meaningful value to the non-compete covenant is strategically important — it creates a tax deduction for the buyer and signals to the seller that their departure terms are taken seriously.

Deal Structure and Financing

Outline how the purchase price will be funded, including SBA loan proceeds, buyer equity injection, seller note, and any earnout component. PMU acquisitions are commonly financed through SBA 7(a) loans, but lenders will scrutinize revenue concentration heavily, so documenting a trained staff beyond the owner is essential.

💡 SBA lenders financing PMU studio acquisitions will typically require the seller to remain operationally involved for 6–12 months post-close, especially if the seller is the primary revenue-generating artist. Structure the seller note on standby for the SBA loan's required period (typically 24 months). The earnout should be specifically tied to measurable PMU metrics — client rebooking rates, touch-up appointment volume, and total service revenue — rather than generic EBITDA targets, which are easier for a transitioning seller to influence downward.

Earnout Structure and Client Retention Metrics

Define the earnout triggers, measurement period, and payout schedule. For PMU studios, the most meaningful earnout metrics are client retention rate post-transition, touch-up appointment volume, and total service revenue from non-owner artists during the earnout period.

💡 Sellers will often resist earnout structures, preferring higher upfront cash. Frame the earnout as shared risk tied to outcomes that the seller can directly influence through a strong transition — not as a penalty for leaving. Avoid earnout structures that can be manipulated; for example, do not tie the earnout solely to total revenue if the seller controls appointment scheduling during the period. Tying a portion to retained client headcount (tracked through a verified booking platform like Vagaro or Mindbody) is the most objective approach for PMU studios.

Seller Transition and Training Obligations

Define the seller's post-closing obligations, including the duration, scope, and compensation for their transition support. For PMU studios where the seller is the lead artist and brand face, this is one of the most negotiated sections in the LOI.

💡 The length and intensity of the transition period is a major negotiation point. Sellers who are burned out will resist long commitments; buyers relying on the seller's name and technique need meaningful knowledge transfer. A middle-ground structure is a 6-month full transition with an option to extend to 12 months at the buyer's election, with declining hourly commitments over time. Make social media account transfer a hard condition of closing — not a best-efforts obligation — since Instagram and TikTok portfolios represent significant brand equity in the PMU industry.

Non-Compete and Non-Solicitation Agreement

Define the geographic scope, duration, and restricted activities of the seller's post-closing non-compete. In the PMU industry, a seller who reopens a competing studio or begins offering services from a home studio within the same market can devastate the acquired client base within months.

💡 Geographic scope and duration are both heavily negotiated. Sellers in major metropolitan areas will push for a shorter radius (5–10 miles) or a carve-out for teaching and education services, since many PMU artists generate income from training programs. Buyers should consider whether to include online training and course sales in the restricted activities — if the seller monetizes a large social media following through PMU education content, this could be a material revenue stream that indirectly competes. A reasonable compromise is to permit online education but prohibit direct client services within the non-compete zone.

Due Diligence Period and Access Rights

Define the length of the due diligence period, the specific categories of information and access the buyer requires, and the consequences of failure to provide requested materials. PMU studio due diligence must cover licensing, health compliance, client data, and revenue concentration.

💡 Sellers are often protective of their client lists and may resist providing full database access before signing a definitive agreement. A workable compromise is to provide aggregated client data (total active clients, average rebooking rate, revenue by service category) during LOI due diligence and full identified client records only after a definitive agreement is signed. Always prioritize reviewing health department inspection history — undisclosed citations or outstanding violations can trigger permit transfer delays that kill a deal at closing.

Exclusivity and No-Shop Provision

Establish that the seller will not solicit, entertain, or negotiate competing offers during the due diligence and negotiation period. Exclusivity protects the buyer's investment of time and money in due diligence.

💡 Sellers represented by brokers will often try to limit exclusivity to 30 days or omit it entirely. Hold firm on 45 days minimum given the complexity of PMU-specific due diligence — reviewing licensing compliance, health records, and client data takes longer than a typical retail business acquisition. If the seller insists on a shorter period, negotiate a conditional extension tied to good-faith progress rather than a hard cutoff that could leave you without a signed agreement mid-diligence.

Conditions to Closing

List the material conditions that must be satisfied before the transaction can close, including regulatory approvals, lease assignment, staff retention, and license transfer confirmations specific to the PMU industry.

💡 Lease assignment is frequently the most time-consuming closing condition for PMU studio acquisitions — landlords in retail or medical office settings can take 30–60 days to respond to assignment requests and may require personal guarantees from the buyer. Build this timeline into your closing schedule. Artist retention agreements are equally critical; if a key employed artist leaves between signing and closing, negotiate the right to renegotiate purchase price or terminate the LOI without penalty.

Deposit and Good Faith Earnest Money

Specify whether a good faith deposit is required, the amount, the conditions under which it is refundable, and the escrow arrangements. This signals buyer seriousness and compensates the seller for taking the studio off the market.

💡 For PMU studio acquisitions in the $300K–$1M purchase price range, a deposit of $10,000–$25,000 is standard. Sellers and brokers may request a larger deposit to signal buyer seriousness; push back if the deposit exceeds 3–5% of the purchase price before due diligence is complete. Ensure the escrow arrangement specifies a neutral third-party holder — do not agree to deposit funds directly with the seller or their attorney without a formal escrow agreement.