A practical LOI guide built for buyers and sellers of regional carriers, freight operators, and owner-operated trucking businesses — covering fleet valuation, DOT compliance contingencies, driver retention, and deal structures that hold up through diligence.
A letter of intent (LOI) is the foundational document in any transportation business acquisition. It establishes the proposed purchase price, deal structure, due diligence timeline, and key conditions before either party invests heavily in legal and financial work. In the transportation sector, a well-drafted LOI must go beyond standard business terms to address asset-specific risks: fleet condition and replacement capital, DOT safety rating and CSA score history, driver classification and turnover, customer concentration, and fuel surcharge mechanisms. For deals in the $1M–$5M revenue range — which represent the majority of owner-operated trucking transactions — the LOI sets the tone for everything that follows. Buyers who submit vague or generic LOIs often lose credibility with experienced transportation sellers, while sellers who accept poorly structured LOIs face renegotiation risk when fleet or regulatory issues surface during diligence. This guide walks through every section of a transportation-specific LOI, with example language, negotiation context, and common pitfalls to avoid.
Find Transportation Businesses to AcquireParties and Transaction Overview
Identifies the buyer entity, seller entity, and the legal structure of the proposed transaction — asset purchase, stock purchase, or merger. In transportation acquisitions, the choice between asset and stock purchase has major implications for DOT operating authority, fleet title transfers, and assumption of liability for prior FMCSA violations or insurance claims.
Example Language
This Letter of Intent is entered into by [Buyer Legal Entity], a [State] [LLC/Corporation] ('Buyer'), and [Seller Legal Entity] ('Seller'), operator of [DBA/Trade Name] ('Company'), a regional [trucking/freight/last-mile delivery] business based in [City, State]. Buyer proposes to acquire substantially all operating assets of the Company, including fleet, equipment, customer contracts, operating authority, and goodwill, structured as an asset purchase transaction. The parties acknowledge that this LOI is non-binding except where expressly stated.
💡 Sellers should confirm whether the buyer intends to assume the existing DOT number and operating authority or obtain a new one — this affects operational continuity and the timeline for regulatory transfers. Buyers acquiring via stock purchase inherit all prior liability, including unresolved CSA violations, insurance litigation, and driver misclassification exposure. Clarify this early to avoid surprises during diligence.
Purchase Price and Valuation Basis
States the proposed total consideration and explains how it was calculated — typically a multiple of trailing twelve-month or three-year average EBITDA, adjusted for fleet fair market value, owner add-backs, and any deferred capital expenditure. Transportation businesses typically trade at 3x–5.5x EBITDA, with premium multiples reserved for carriers with modern fleets, clean DOT records, and diversified contracted revenue.
Example Language
Buyer proposes a total purchase price of $[X], representing approximately [3.5x–5.0x] the Company's trailing twelve-month adjusted EBITDA of $[X], as reported in Seller's 2023 financial statements. This valuation assumes a fleet fair market value of $[X] based on preliminary review of Seller's equipment schedule and excludes any vehicles with remaining financing balances unless separately negotiated. The purchase price is subject to adjustment based on findings during the due diligence period, including fleet condition assessments, open insurance claims, and normalized working capital at close.
💡 Sellers should negotiate the EBITDA add-back schedule upfront — common transportation add-backs include owner compensation above market rate, personal vehicle expenses, fuel for non-business use, and one-time maintenance costs. Buyers should resist agreeing to a fixed price before reviewing fleet condition reports, maintenance logs, and CSA score history, as deferred fleet capex can materially reduce true EBITDA.
Deal Structure and Financing
Outlines how the acquisition will be funded, including any SBA 7(a) financing, seller note, earnout, equipment financing assumptions, and equity contribution. The majority of lower middle market transportation acquisitions are funded through a combination of SBA debt, seller carry, and buyer equity.
Example Language
Buyer intends to finance the acquisition as follows: approximately [70–80%] of the purchase price via SBA 7(a) loan through [Lender Name or TBD], [10–15%] via a seller promissory note at [6–8%] interest over [36–60] months subordinated to senior debt, and the balance as buyer equity contribution. Seller note will be subject to SBA lender approval and standby provisions. Buyer will assume existing equipment financing on the following vehicles: [list or TBD], subject to lender consent. Any vehicles with outstanding liens not assumed by Buyer will be cleared at closing from sale proceeds.
💡 SBA 7(a) financing for transportation businesses requires the lender to evaluate fleet collateral, which means aging or high-mileage vehicles may reduce eligible loan proceeds. Sellers should understand that the seller note will likely be on standby for the first 24 months under SBA rules, limiting cash flow from that portion. Buyers should confirm SBA eligibility early — fleet-heavy businesses with strong EBITDA are generally favorable candidates.
Earnout Provisions
Defines performance-based contingent consideration tied to post-close financial metrics, commonly used in transportation deals where customer relationships are owner-dependent or where one or two freight clients represent significant revenue concentration.
Example Language
Up to $[X] of the purchase price will be structured as an earnout, payable over [24–36] months post-closing, contingent upon the Company achieving the following thresholds: (i) retention of customer contracts representing no less than [85%] of trailing twelve-month revenue as of the close date, measured at months 12 and 24; and (ii) EBITDA of no less than $[X] in each earnout year. Earnout payments will be calculated quarterly and paid within 45 days of each quarter-end. Buyer will maintain separate revenue and expense accounting for the acquired business during the earnout period.
💡 Earnouts in transportation deals are most defensible when tied to customer contract retention rather than EBITDA alone, since Buyer controls post-close operating decisions that affect margins. Sellers should negotiate a minimum floor payment, protection against Buyer-driven cost increases that artificially suppress EBITDA, and a clear accounting methodology agreed upon before closing.
Assets Included and Excluded
Provides a preliminary list of assets to be transferred at closing, including fleet equipment, DOT operating authority, customer contracts, trade name, dispatch systems, and real property if applicable. Clearly identifying excluded assets prevents disputes during diligence and at closing.
Example Language
The following assets are included in the proposed transaction: all rolling stock identified in Exhibit A (fleet schedule), DOT operating authority number [XXXXXX], all customer freight agreements and rate schedules, the trade name '[Company Name]', dispatch and routing software licenses, driver employment records and CDL documentation, maintenance logs and warranty records, and goodwill associated with the business. Excluded assets include: [owner's personal vehicle(s)], [real property owned by Seller], [accounts receivable generated prior to closing date unless separately agreed], and [any non-compete or ownership interests in affiliated entities].
💡 Buyers should confirm that DOT operating authority, insurance policies, and freight broker licenses (if applicable) are transferable and that there are no pending revocations or material unresolved compliance actions. Sellers should list excluded assets explicitly to avoid ambiguity — personal vehicles, real estate, and pre-close receivables are common points of conflict if not addressed in the LOI.
Due Diligence Period and Access
Establishes the length of the due diligence period, the scope of information to be provided by the Seller, and the access Buyer will have to fleet, facilities, customers, drivers, and financial records. Transportation diligence is more operationally intensive than most industries due to physical asset inspection and regulatory record review.
Example Language
Buyer shall have [45–60] calendar days from the date of full execution of this LOI to conduct due diligence ('Due Diligence Period'). Seller agrees to provide reasonable access to: (i) three years of financial statements and tax returns; (ii) complete fleet inventory with mileage, maintenance records, and financing schedules; (iii) DOT safety rating history, CSA score records, and FMCSA compliance documentation; (iv) all customer contracts, freight agreements, and rate schedules; (v) driver roster with CDL status, classification, tenure, and compensation; and (vi) insurance policies, claims history for the trailing three years, and current coverage terms. Physical inspection of all fleet assets will be arranged by mutual agreement within the first [15] days of the Due Diligence Period.
💡 Buyers should prioritize fleet condition assessment and third-party mechanical inspection early in diligence — deferred maintenance and looming replacement costs are the most common source of post-LOI price renegotiation in transportation deals. Sellers should require a signed NDA before granting access to customer contracts and driver information, and should consider limiting direct customer or driver contact until later in the process to protect operational stability.
Exclusivity
Grants the buyer an exclusive negotiating period during which the seller agrees not to solicit or entertain other offers. This is a binding provision and one of the most negotiated terms in any LOI.
Example Language
In consideration of Buyer's investment of time and resources in due diligence, Seller agrees that for a period of [60] days from the date of LOI execution ('Exclusivity Period'), Seller will not solicit, encourage, or enter into discussions with any other party regarding the sale, transfer, or recapitalization of the Company or its assets. If Buyer and Seller have not executed a definitive purchase agreement by the end of the Exclusivity Period, either party may terminate this LOI upon written notice, unless mutually extended in writing.
💡 Sixty days is standard for lower middle market transportation deals given the complexity of fleet inspection and DOT diligence. Sellers should resist exclusivity periods exceeding 75–90 days without clear milestones and buyer funding confirmation. If the buyer is using SBA financing, sellers should request evidence of lender pre-qualification before granting exclusivity, as SBA approval timelines can extend the process significantly.
Conditions to Closing
Lists the conditions that must be satisfied before either party is obligated to close the transaction. In transportation acquisitions, regulatory and fleet-specific conditions are critical additions to standard closing requirements.
Example Language
The obligation of Buyer to proceed to closing is conditioned upon, among other things: (i) satisfactory completion of due diligence in Buyer's sole discretion; (ii) confirmation that the Company's DOT safety rating is Satisfactory and no material FMCSA enforcement actions are pending or threatened; (iii) fleet inspection results confirming no aggregate deferred maintenance liability exceeding $[X]; (iv) execution of a definitive asset purchase agreement on terms acceptable to both parties; (v) receipt of SBA lender commitment or alternative financing on terms acceptable to Buyer; (vi) execution of a [2–3] year non-compete and non-solicitation agreement by Seller; and (vii) Seller's cooperation in transitioning key customer relationships and driver personnel during a [30–90] day post-close transition period.
💡 The fleet condition threshold in condition (iii) is one of the most negotiated items — buyers should conduct independent mechanical inspections before agreeing to a specific dollar cap. Sellers should push back on overly broad 'sole discretion' language and negotiate objective diligence termination standards where possible. Non-compete scope should be limited to the geographic markets the Company actively serves to be enforceable.
Non-Compete and Transition Assistance
Outlines the seller's commitment to refrain from competing after closing and to actively support the operational and customer transition. This section is especially critical in owner-operated transportation businesses where the seller is the primary relationship holder for key freight clients and long-tenured drivers.
Example Language
Seller agrees to execute a non-competition agreement restricting Seller from directly or indirectly engaging in [trucking/freight/logistics] operations within [100] miles of the Company's primary operating territory for a period of [3] years following the closing date. Seller further agrees to provide transition assistance for a period of [60–90] days post-closing, including customer introductions, driver retention support, dispatch system training, and DOT compliance orientation for Buyer's management team. Compensation for transition services, if any, shall be agreed upon separately.
💡 In transportation, the seller's relationships with long-haul freight customers and tenured CDL drivers are often the most valuable intangible assets. Buyers should negotiate a structured transition plan with specific deliverables — customer introduction meetings, driver Q&A sessions, and dispatch handoff milestones — rather than a vague 'cooperation' clause. Sellers should define the scope of post-close obligations clearly to avoid open-ended commitments.
Confidentiality
Establishes that the terms of the LOI and all information exchanged during the negotiation and due diligence process are confidential and may not be disclosed to third parties, including employees, drivers, or customers.
Example Language
Each party agrees to maintain in strict confidence the existence and terms of this LOI and all information exchanged in connection with the proposed transaction, including financial statements, customer lists, driver rosters, fleet valuations, and operational data. Neither party shall disclose such information to any third party — including employees, customers, or carriers — without the prior written consent of the other party, except as required by law or to legal and financial advisors bound by equivalent confidentiality obligations. This confidentiality obligation shall survive termination of this LOI for a period of [24] months.
💡 Confidentiality is particularly sensitive in transportation deals because early disclosure can trigger driver departures, customer inquiries about service continuity, or competitive responses from other carriers. Sellers should ensure drivers and key dispatchers are not notified until a definitive agreement is executed and a communication plan is in place.
Fleet Valuation and Deferred Capital Expenditure Adjustment
The fair market value of the fleet and any required near-term replacement capital should be agreed upon before LOI execution or clearly defined as a diligence condition. Buyers should insist on third-party mechanical inspections, and any aggregate deferred maintenance or replacement cost exceeding a negotiated threshold should trigger a purchase price reduction. This is the single most common source of post-LOI renegotiation in transportation deals.
Customer Concentration and Earnout Trigger Structure
If one or two freight customers represent more than 25–30% of revenue, buyers should negotiate an earnout tied to those specific customer retention milestones rather than aggregate EBITDA. Define 'retention' clearly — whether it means contract renewal, minimum revenue from that customer, or continued active lane utilization — to prevent disputes post-close.
DOT Safety Rating and CSA Score Representations
Sellers should represent that the current DOT safety rating is Satisfactory and that no material FMCSA enforcement actions, out-of-service orders, or safety audit findings are pending or anticipated. Buyers should negotiate the right to walk away without penalty if the DOT rating is Conditional or Unsatisfactory at any point during diligence, or if CSA scores in the Unsafe Driving or HOS Compliance categories exceed FMCSA intervention thresholds.
Driver Classification and Labor Liability Representations
With independent contractor misclassification enforcement increasing at both the federal and state level, buyers must negotiate clear representations from sellers regarding the classification status of all drivers — W-2 employees vs. 1099 independent contractors — and the existence of any pending or threatened labor claims, DOL audits, or state agency investigations. Liability for misclassification claims arising from pre-close operations should remain with the seller post-closing.
Working Capital Peg and Accounts Receivable Treatment
Transportation businesses often carry significant accounts receivable from freight clients on 30–60 day payment terms. The LOI should define whether pre-close receivables are included in the purchase price or retained by the seller, establish a normalized working capital target at closing, and specify the adjustment mechanism if working capital at close deviates from the agreed peg. This prevents sellers from drawing down receivables before closing to inflate cash retained.
Find Transportation Businesses to Acquire
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Transportation businesses in the $1M–$5M revenue range typically trade at 3x–5.5x adjusted EBITDA. The specific multiple depends on fleet age and condition, DOT safety rating and CSA score history, customer contract quality and concentration, driver workforce stability, and whether the business has documented recurring freight agreements. A carrier with a modern fleet, clean DOT record, and diversified contracted revenue will command a premium multiple, while businesses with aging equipment, customer concentration, or regulatory compliance issues often trade at the lower end of the range or require price adjustments during diligence.
Most lower middle market transportation acquisitions are structured as asset purchases. This allows the buyer to acquire the fleet, customer contracts, DOT operating authority, and goodwill while leaving behind pre-close liabilities — including historical insurance claims, driver misclassification exposure, and unresolved FMCSA violations. Stock purchases can simplify the transfer of DOT operating authority and existing customer contracts but expose buyers to all historical liabilities. If a stock purchase is used, buyers should negotiate robust representations and warranties from the seller and consider rep and warranty insurance. Consult with a transportation-experienced M&A attorney before finalizing structure.
SBA 7(a) loans are commonly used to finance transportation acquisitions in the $1M–$5M revenue range. The SBA will evaluate the business's EBITDA, fleet collateral value, and the buyer's creditworthiness. Transportation businesses are generally favorable SBA candidates due to their tangible asset base and cash-flowing nature. A typical structure includes 70–80% SBA debt, 10–15% seller note on standby, and 10% buyer equity injection. Note that the SBA lender will independently assess fleet collateral — aging or high-mileage vehicles may reduce the appraised collateral value and limit eligible loan proceeds. SBA approval timelines of 60–90 days should be factored into the exclusivity period.
The five highest-priority diligence areas in a transportation acquisition are: (1) Fleet condition — obtain third-party mechanical inspections on all vehicles and quantify deferred maintenance and near-term replacement capital; (2) DOT safety rating and CSA scores — request the full FMCSA compliance history, SMS data, and any prior safety audit results; (3) Driver roster — confirm CDL status, verify employee vs. independent contractor classification, and assess turnover rates; (4) Customer contracts — review all freight agreements, rate schedules, renewal terms, and concentration metrics; and (5) Insurance history — obtain a full three-year loss run and confirm current coverage adequacy. These five areas account for the majority of post-LOI price renegotiations and deal failures in transportation transactions.
Earnouts in transportation acquisitions are most effective when tied to objective, measurable metrics tied to the seller's direct influence — primarily customer contract retention and revenue from specific freight clients. Tying earnouts solely to EBITDA is risky for sellers because post-close operating decisions by the buyer (fuel purchasing, driver compensation, route optimization) directly affect margins. A well-structured transportation earnout specifies: the total earnout amount, the measurement period (typically 12–36 months), the specific retention or revenue thresholds, the payment calculation and timing, accounting methodology, and seller protections against buyer-driven decisions that artificially suppress the earnout metric. Sellers should negotiate a partial payment structure so that partial retention yields partial earnout payment rather than an all-or-nothing binary outcome.
Most lower middle market transportation acquisitions take 90–150 days from executed LOI to closing. The due diligence period for fleet-intensive businesses typically runs 45–60 days, accounting for physical fleet inspections, DOT compliance review, and financial analysis. SBA financing adds 60–90 days for lender underwriting and approval, though experienced SBA lenders familiar with transportation deals can sometimes compress this timeline. Sellers should prepare for this timeline by having financial statements, fleet records, DOT documentation, and customer contracts organized before the LOI is signed — buyers who receive well-organized diligence packages close faster and with fewer renegotiations.
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