A field-ready LOI framework built for the real complexities of title agency acquisitions — underwriter consent clauses, escrow account transitions, referral concentration carve-outs, and staff retention provisions included.
Acquiring a title and escrow company requires an LOI that goes well beyond standard business purchase templates. Unlike a typical service business, a title agency's value is embedded in underwriter agency agreements that may require third-party consent before they can be assigned, escrow trust accounts that carry regulatory and fiduciary obligations, and referral relationships with realtors and lenders that are tied to specific individuals — often including the owner. A poorly structured LOI can expose the buyer to deal collapse if underwriter approval is delayed, or leave a seller unprotected if the buyer walks after sensitive operational information has been disclosed. This guide walks through each section of a title company LOI with example language, negotiation context, and industry-specific considerations for transactions in the $1M–$5M revenue range. Whether you're structuring an asset purchase with escrow novation or a stock purchase designed to preserve existing licenses and agency agreements, the terms you set in the LOI will define the entire deal trajectory.
Find Title & Escrow Company Businesses to AcquireTransaction Structure
Defines whether the deal is structured as an asset purchase or stock purchase, which has major implications for license transferability, underwriter agreement continuity, and liability assumption. Stock purchases are often preferred in title company acquisitions to preserve existing state licenses and underwriter agency agreements, but they carry legacy liability risk. Asset purchases are cleaner from a liability standpoint but require new licensing and underwriter approvals in most states.
Example Language
Buyer proposes to acquire 100% of the issued and outstanding membership interests (or shares) of [Company Name] ('the Company') through a stock purchase transaction. The parties acknowledge that this structure is intended to preserve the Company's existing title insurance underwriter agency agreements with [Underwriter A] and [Underwriter B], state operating licenses in [State(s)], and active escrow trust account relationships. If any underwriter requires a consent or novation as a condition of closing, Seller agrees to use commercially reasonable efforts to obtain such consent within 45 days of LOI execution. If Buyer and Seller mutually agree to convert to an asset purchase structure, the parties will negotiate in good faith regarding allocation of asset values and assumption of specifically identified liabilities.
💡 Sellers strongly prefer stock purchases to avoid triggering underwriter re-approval processes, but buyers must conduct thorough diligence on historical claims, escrow reconciliation history, and any regulatory actions before accepting legacy entity liability. Negotiate a clear fallback provision that specifies what happens if underwriter consent is denied or delayed — including who bears the cost of extended exclusivity periods and whether the deal price adjusts.
Purchase Price and Valuation Basis
States the proposed purchase price, the valuation methodology used to arrive at it, and the financial metrics it is based on. Title company valuations typically range from 3x–5.5x EBITDA depending on revenue diversification, underwriter relationship quality, staff tenure, and market position. For companies in active residential markets with strong referral networks, multiples toward the higher end are defensible.
Example Language
Buyer proposes a total enterprise purchase price of $[X,XXX,000], representing approximately [X.X]x the Company's trailing twelve-month adjusted EBITDA of $[XXX,000] as of [Date]. This valuation is based on Buyer's preliminary review of financial statements for fiscal years [YYYY–YYYY], including revenue segmentation by transaction type (residential purchase, residential refinance, and commercial), and assumes no material undisclosed liabilities, escrow shortfalls, open title insurance claims, or pending regulatory actions. The purchase price is subject to adjustment following completion of financial and operational due diligence. Final allocation between goodwill, covenant not to compete, customer relationships, and fixed assets will be agreed upon prior to definitive agreement execution.
💡 Sellers often anchor to gross revenue multiples (0.5x–1.0x revenue is common in informal discussions), but sophisticated buyers underwrite to EBITDA. Normalize EBITDA for owner compensation, discretionary expenses, and any one-time revenue from unusually high refinance volume years. If the trailing twelve months reflect a rate-spike slowdown, consider offering a blended multiple on a two- or three-year average EBITDA to bridge the valuation gap.
Payment Structure and Seller Note
Details how the purchase price will be funded, including cash at close, any seller financing component, and earnout provisions. Title company deals commonly include a 10–20% seller note to bridge the underwriter approval period and retain seller engagement during the transition, plus an earnout tied to referral volume retention.
Example Language
The purchase price shall be payable as follows: (i) $[X,XXX,000] in cash at closing, funded through a combination of Buyer's equity and SBA 7(a) financing; (ii) a Seller promissory note in the amount of $[XXX,000] bearing interest at [X]% per annum, payable in equal monthly installments over [24–36] months from closing, subordinated to the senior SBA lender; and (iii) an earnout of up to $[XXX,000] payable over 24 months post-closing, contingent on the Company retaining no less than [80]% of trailing twelve-month closed order volume from existing referral sources as measured on a rolling quarterly basis. Earnout payments will be calculated and paid within 30 days following each measurement quarter.
💡 The seller note and earnout serve dual purposes: they reduce buyer cash exposure at close and align the seller's interest in a successful transition. Sellers should negotiate a floor on the earnout that compensates them even if a market-wide housing slowdown — not referral loss — reduces volume. Consider tying the earnout to number of orders from retained referral sources rather than raw revenue, which can fluctuate based on rate environment.
Escrow Account and Trust Fund Transition
Addresses the treatment of escrow trust accounts, which are among the most legally sensitive assets in any title company transaction. Escrow accounts carry fiduciary obligations to third parties and are subject to state regulatory oversight. The LOI should establish the parties' agreement on reconciliation requirements, novation process, and liability for any pre-closing shortfalls.
Example Language
As a condition to closing, Seller shall provide Buyer with a full reconciliation of all escrow trust accounts as of the date no earlier than five (5) business days prior to closing, certified by Seller and reviewed by Buyer's designated CPA. All escrow trust accounts shall be fully funded with no shortfalls or open items as of the closing date. Buyer and Seller agree to cooperate in executing all documentation required by applicable state regulators and depository banks to novate or transfer escrow account authority to Buyer or its designated successor entity. Seller shall remain jointly liable for any escrow shortfall, claim, or regulatory deficiency arising from pre-closing transactions for a period of [36] months following closing, and Seller's promissory note shall serve as partial security for this indemnification obligation.
💡 Never waive the requirement for a clean escrow reconciliation prior to close. Escrow shortfalls are a leading cause of post-close disputes in title company transactions and can trigger state regulatory action against the new owner. Sellers should ensure the LOI defines 'shortfall' clearly and excludes timing differences that will resolve within normal operating cycles. Buyers should engage a CPA with title industry experience to review the reconciliation independently.
Underwriter Agreement Transferability and Consent
Specifically addresses the status of title insurance underwriter agency agreements and the process for obtaining any required consents or approvals from underwriters. This is one of the most deal-critical sections in any title company LOI and should be addressed explicitly rather than left to due diligence findings.
Example Language
The parties acknowledge that the Company currently holds agency agreements with [Underwriter A], [Underwriter B], and [Underwriter C] (collectively, 'Underwriter Agreements'). Seller represents that, to the best of Seller's knowledge, no Underwriter Agreement contains a provision prohibiting assignment or transfer without underwriter consent in connection with a change of control transaction. Seller agrees to deliver written notice to each underwriter within [10] business days of LOI execution and to use commercially reasonable efforts to obtain written consent, non-objection, or confirmation of assignment from each underwriter within [45] days. Failure to obtain consent from [Underwriter A] within [60] days shall constitute a condition to closing that, if not waived by Buyer in writing, shall permit Buyer to terminate this LOI and receive a full refund of any good faith deposit. Seller shall not permit any Underwriter Agreement to lapse, be placed on probation, or be terminated during the exclusivity period without Buyer's prior written consent.
💡 Some underwriters — particularly the national carriers like Fidelity, First American, and Old Republic — have formal change-of-control notification requirements that can take 30–60 days to process. Build this timeline into the LOI exclusivity period. Sellers should proactively reach out to their underwriter representatives before LOI execution to gauge any likely friction. If the company has a single underwriter and that agreement is up for renewal, treat this as a material risk that should be reflected in either a price reduction or an extended earnout period.
Exclusivity and No-Shop Period
Grants the buyer an exclusive negotiating window during which the seller agrees not to solicit or entertain competing offers. Given the complexity of title company due diligence — including underwriter consent timelines and escrow account reviews — the exclusivity period should be longer than a typical business acquisition.
Example Language
In consideration of Buyer's commitment to proceed with due diligence and incur associated costs, Seller agrees to a period of exclusive negotiation with Buyer for [75] days from the date of full execution of this LOI ('Exclusivity Period'). During the Exclusivity Period, Seller shall not, directly or indirectly, solicit, encourage, or enter into discussions with any other party regarding the sale, recapitalization, or merger of the Company or any material portion of its assets. The Exclusivity Period may be extended by mutual written agreement of the parties for up to an additional [30] days if underwriter consent processes are ongoing and both parties are negotiating in good faith toward a definitive agreement.
💡 75 days is appropriate for title company transactions given the underwriter consent and escrow review requirements. Sellers should resist exclusivity periods beyond 90 days without a hard deadline and clear termination rights. Buyers should use the first 30 days to complete financial and operational due diligence, days 30–60 for legal and regulatory review, and reserve the remaining period for underwriter consent and definitive agreement negotiation.
Due Diligence Access and Confidentiality
Establishes the scope of buyer's access to company records, personnel, and referral source information during the due diligence period, along with confidentiality protections to protect the seller's relationships and competitive position.
Example Language
Following execution of this LOI, Seller shall provide Buyer with reasonable access to the Company's financial records, underwriter agency agreements, state licenses, escrow trust account reconciliations, claims history reports, staffing records, and technology systems for the purpose of completing due diligence. Buyer agrees that all information disclosed shall be subject to the confidentiality agreement executed on [Date] and shall not be shared with competitors, referral sources, or employees of the Company without Seller's prior written consent. Buyer shall not contact any referral source (realtor, lender, or builder), underwriter representative, or employee of the Company without Seller's prior written approval, except as required for underwriter consent processes mutually agreed upon by the parties.
💡 Sellers should be particularly protective of referral source contact lists, which represent the core of the business's enterprise value. Limit buyer's direct contact with referral sources until after a definitive agreement is signed or the deal is very near closing. Buyers need direct underwriter contact to assess agency agreement transferability — negotiate carve-outs for this specific purpose with seller present or on the communication chain.
Key Employee Retention and Non-Solicitation
Addresses the retention of licensed escrow officers, closers, and processors whose relationships with referral sources are critical to business continuity post-close. This section also covers restrictions on the seller's ability to re-enter the market after closing.
Example Language
Buyer and Seller acknowledge that the continued employment of [Name(s) or Title(s)] as licensed escrow officer(s) is material to the value of the transaction. As a condition to closing, Buyer shall offer employment agreements to the following employees: [list names or titles], with compensation no less favorable than current compensation, for a minimum term of [24] months post-closing. Seller agrees to a non-competition covenant for a period of [3] years within a [50]-mile radius of the Company's principal office and within any county in which the Company has operated during the trailing 24 months. Seller further agrees to a non-solicitation covenant prohibiting Seller from directly or indirectly soliciting or redirecting any referral source, underwriter, or employee of the Company for [3] years following closing.
💡 Non-compete and non-solicitation terms in title company transactions are among the most negotiated provisions given how relationship-dependent the business is. Buyers should tie a meaningful portion of the seller note to compliance with these covenants rather than accepting general contract indemnification. Sellers should negotiate a carve-out that permits them to work in a non-competing geography or in a non-title-related capacity without penalty.
Seller Transition Period and Consulting Agreement
Defines the seller's post-closing role, compensation, and responsibilities during the transition period in which they will introduce buyer to referral sources, underwriter contacts, and key clients. For title companies, a 6–12 month active transition is typically required to preserve referral relationships.
Example Language
Seller agrees to remain actively engaged with the Company for a minimum period of [9] months following closing in the capacity of Senior Transition Advisor, at a monthly consulting fee of $[X,XXX]. During the Transition Period, Seller shall: (i) personally introduce Buyer or Buyer's designated representative to all top referral sources representing the top 80% of closed order volume; (ii) notify all underwriter contacts of the change in ownership and facilitate introductory meetings; (iii) remain available to Company staff for operational questions during normal business hours; and (iv) not take any action that would undermine Buyer's relationship with any referral source, underwriter, or employee. The transition consulting agreement shall be documented in a separate agreement attached to the Definitive Agreement.
💡 Sellers often underestimate how critical their personal engagement is during the first 6–12 months post-close. Buyers should require that the transition period be structured as a genuine operational handoff — not a token appearance. Tie a portion of the earnout explicitly to seller's completion of referral source introductions rather than relying solely on goodwill obligations.
Conditions to Closing
Lists the material conditions that must be satisfied before either party is obligated to close the transaction. For title company acquisitions, conditions are more extensive than typical business deals due to regulatory, underwriter, and escrow-specific requirements.
Example Language
The obligation of Buyer to consummate the transactions contemplated herein is conditioned upon satisfaction of the following, each in form and substance acceptable to Buyer in its reasonable discretion: (i) receipt of written consent or non-objection from all title insurance underwriters whose agency agreements require change-of-control approval; (ii) full reconciliation and clean certification of all escrow trust accounts with no shortfalls as of a date within 5 business days of closing; (iii) confirmation that all state operating licenses are in good standing and transferable or re-issuable to Buyer in the applicable jurisdictions; (iv) execution of employment or retention agreements with identified key escrow officers; (v) receipt of SBA lender final approval and loan commitment; (vi) completion of buyer's due diligence to buyer's satisfaction, with no material adverse findings; and (vii) absence of any pending claims, regulatory actions, or escrow deficiencies not previously disclosed.
💡 Sellers should push back on any condition framed as 'buyer's satisfaction in its sole discretion' — negotiate objective standards wherever possible. Both parties should agree on a 'materiality' threshold for due diligence findings that would permit buyer to re-trade price versus terminate, rather than leaving this undefined. A clear definition of what constitutes a material adverse change in a cyclical, rate-sensitive business like title insurance is essential.
Underwriter Consent Timeline and Deal Termination Rights
The single most deal-specific negotiation point in a title company acquisition. Agree upfront on how long the parties will wait for underwriter consent, who bears costs during extended delays, and what happens if consent is denied. Define whether denial by a secondary underwriter is a deal-breaker or simply a price adjustment event.
Earnout Measurement Methodology in a Cyclical Market
Earnouts in title company deals must account for market-driven volume declines that have nothing to do with seller's transition performance. Negotiate measurement on orders received or referral source count rather than gross revenue, and include a market adjustment provision that compares company volume to a regional or national title order volume index.
Escrow Account Indemnification Period and Security
Determine how long the seller remains on the hook for pre-closing escrow deficiencies, what security (seller note holdback, escrow reserve) backs that obligation, and whether there is a cap on seller's post-close indemnification liability. State regulators can surface escrow issues years after a transaction closes.
Seller Non-Compete Geography and Carve-Outs
Title industry non-competes must be carefully scoped to be enforceable and fair. Negotiate the geographic radius based on actual referral source overlap rather than a blanket state-wide restriction. Include carve-outs for seller's work as an attorney (if applicable) or in a non-title financial services capacity.
Working Capital Peg and Pre-Close Revenue Adjustments
Define the target working capital level at close, how it is calculated for a title company (excluding escrow trust funds held for third parties), and whether the purchase price adjusts dollar-for-dollar for deviations. Avoid disputes by agreeing on the working capital definition and calculation methodology in the LOI rather than deferring to the definitive agreement.
Staff Retention Conditions and Offer Timing
Specify which employees must receive and accept employment offers as a condition to closing, the minimum compensation terms of those offers, and whether a key employee's refusal to accept an offer triggers a price adjustment or deal termination right. Negotiate who bears the cost of retention bonuses if needed to keep critical closers through the transition.
SBA Lender Approval as a Closing Condition
If the buyer is using SBA 7(a) financing, the LOI should explicitly state that SBA lender approval is a condition to buyer's obligation to close, with a defined outside date. Sellers should negotiate a reciprocal right to terminate if SBA approval is not obtained within a specified period, rather than remaining indefinitely bound to exclusivity.
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Most title company acquisitions favor a stock purchase structure specifically to preserve the seller's existing state operating licenses and title insurance underwriter agency agreements, which can be difficult or time-consuming to transfer or re-obtain in an asset deal. However, stock purchases carry the risk of inheriting undisclosed liabilities, including open title insurance claims, escrow shortfalls, or prior regulatory actions. Buyers using a stock purchase structure should conduct thorough due diligence on claims history, escrow reconciliations, and any prior state regulatory correspondence, and negotiate robust indemnification provisions with a meaningful holdback or seller note to secure those obligations.
Address underwriter agreements explicitly in the LOI rather than leaving them as a due diligence discovery item. Require the seller to disclose all underwriter agency agreements and any change-of-control or assignment restrictions within 10 days of LOI execution. Include a specific closing condition tied to receipt of written consent or non-objection from each underwriter whose agreement requires approval. Define a timeline — typically 45–60 days — after which the buyer has the right to terminate if consent has not been obtained, and specify that the seller must not allow any underwriter agreement to lapse or be placed on probation during the exclusivity period.
A 12–24 month earnout tied to closed order volume from retained referral sources is the most common structure for title company deals. A typical earnout pays out up to 15–25% of the total purchase price contingent on the business retaining 75–85% of trailing twelve-month referral volume from existing sources. The key negotiation point is the measurement metric: use number of orders received from retained referral partners rather than gross revenue, which is too sensitive to interest rate cycles and average transaction values to fairly measure seller's transition performance. Include a market adjustment provision that reduces the retention threshold proportionally if regional transaction volumes decline by more than a defined percentage.
Title company transactions typically require 60–90 days of exclusivity to accommodate the unique complexity of the deal process. The first 30 days should cover financial and operational due diligence including escrow reconciliation review, revenue concentration analysis, and staff assessment. Days 30–60 should address legal and regulatory review including state licensing transferability and underwriter agreement analysis. The remaining period accommodates underwriter consent processes and definitive agreement negotiation. Build in a mutual extension option of 15–30 days if underwriter consent processes are ongoing and both parties are actively progressing toward close.
The LOI should specifically reference five due diligence workstreams that are unique to title company acquisitions: (1) full reconciliation and third-party review of all escrow trust accounts with no shortfalls; (2) review and written confirmation of assignability of all title insurance underwriter agency agreements; (3) claims history reports from each underwriter showing loss ratios for the past 3–5 years and any open or pending claims; (4) confirmation of current status and transferability of all state title agency licenses and individual employee licenses; and (5) referral source concentration analysis showing the percentage of closed order volume attributable to the top 5 and top 10 referral sources by name. These items should be listed as conditions to closing rather than general due diligence requests to give them contractual weight.
Independent title and escrow companies in the $1M–$5M revenue range typically trade at 3x–5.5x adjusted EBITDA. The multiple reflects the quality and diversification of referral relationships, the stability and transferability of underwriter agreements, staff tenure and independence from the owner, and the revenue mix between residential purchase, refinance, and commercial transactions. Businesses with highly concentrated referral sources (one lender or brokerage representing more than 25% of volume), single underwriter dependency, or heavy owner involvement in day-to-day closings trade at the lower end of the range. Companies with diversified referral networks, seasoned licensed staff, clean escrow histories, and strong commercial title revenue can support multiples at or above the midpoint of the range.
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