Letter of Intent Template for Acquiring a Wedding Catering Company

Parties and Transaction Overview

Identifies the buyer entity, seller entity, and the business being acquired. Establishes whether the transaction is structured as an asset purchase or equity purchase, which has significant implications for venue contract transferability and liability assumption in the catering context.

💡 Asset purchase structures are strongly preferred for wedding catering acquisitions because they allow the buyer to avoid assuming unknown liabilities such as health code violations, staffing disputes, or unfulfilled event deposits. However, sellers often prefer equity sales for tax treatment. Be explicit about which contracts — especially venue preferred vendor agreements — the buyer intends to assume, as many contain anti-assignment clauses requiring venue consent to transfer.

Purchase Price and Valuation Basis

States the proposed purchase price, the valuation methodology used, and the financial basis upon which the offer is made. For wedding catering companies, this typically references a multiple of trailing twelve-month or trailing three-year average EBITDA, adjusted for owner add-backs and normalized food and labor costs.

💡 Wedding catering EBITDA multiples typically range from 2.5x to 4.5x depending on forward pipeline strength, venue contract depth, and owner dependency. Buyers should apply downward pressure on multiples when the seller is the primary chef or event coordinator, or when more than 20% of bookings originate from a single venue or planner. Always request a detailed add-back schedule and verify that personal vehicle expenses, family payroll, and non-business travel have been properly identified and removed from seller-adjusted EBITDA.

Transaction Structure and Financing

Outlines how the deal will be funded, including the proposed use of SBA 7(a) financing, seller note, buyer equity injection, and any earnout or equity rollover components. Wedding catering acquisitions are frequently SBA-eligible, but lenders will scrutinize the forward pipeline and venue contract transferability closely.

💡 SBA lenders will require evidence of the forward booking pipeline, documentation of venue preferred vendor agreements, and often a seller transition and training commitment of 6–12 months. If the seller is unwilling to carry a seller note — even a small one — treat this as a red flag, as it signals low confidence in post-close business performance. Structure the seller note with a standby period of 24 months to satisfy SBA subordination requirements.

Earnout Provisions

Defines the structure, measurement period, and payout conditions for any earnout tied to post-close revenue retention, booking conversion, or venue relationship continuity. Earnouts are common in wedding catering deals where forward pipeline value is a significant portion of total deal value.

💡 Sellers will resist long earnout periods and complex measurement metrics. Keep earnout structures simple — tie them to total booked revenue executed rather than EBITDA, which is easier to manipulate and harder to verify. Specify that Buyer cannot deliberately redirect bookings to a related entity to deflate earnout calculations. Sellers should push to cap the earnout measurement at 24 months maximum and insist on monthly reporting access to booking and revenue records during the earnout period.

Deposit Pipeline and Liability Assumption

Addresses how collected client deposits in the forward booking pipeline will be treated at closing — one of the most operationally significant and often overlooked provisions in wedding catering acquisitions. Deposits represent real cash held by the seller that corresponds to future service obligations the buyer will inherit.

💡 This is frequently a six-figure negotiation point that surprises first-time buyers. If $200,000 in deposits is sitting in the seller's operating account and the buyer is assuming all post-close event obligations, those deposits must transfer to the buyer or be credited against the purchase price — otherwise the buyer is financing the seller's working capital. Insist on a reconciled deposit schedule as a due diligence deliverable within the first two weeks of exclusivity.

Venue and Vendor Contract Transferability

Establishes the seller's obligation to facilitate the transfer of preferred vendor agreements, venue partnership contracts, and referral relationships as a condition of closing. This is the single most relationship-dependent provision in a wedding catering LOI.

💡 Some high-demand wedding venues grant preferred vendor status on a personal relationship basis and will not contractually commit to honoring it under new ownership. Buyers should insist on direct conversations with the top three to five venue partners before closing to gauge relationship transferability. Consider structuring a formal transition meeting between the seller, buyer, and venue event directors as a closing condition rather than leaving relationship handoffs to informal promises.

Due Diligence Period and Exclusivity

Specifies the length of the exclusive due diligence period, the scope of information the seller must provide, and the conditions under which the LOI may be terminated without penalty by either party.

💡 Wedding catering sellers are often reluctant to grant long exclusivity periods during peak booking season because they fear losing prospective clients if word of a sale circulates. A 45-day exclusivity window is standard and appropriate for this industry. Consider offering a small, refundable good-faith deposit of $10,000–$25,000 to demonstrate commitment and give the seller confidence to enter exclusivity during an active booking period.

Seller Transition and Non-Compete

Defines the seller's post-close transition obligations, including training, staff and venue introductions, and the geographic scope and duration of the non-compete and non-solicitation restrictions.

💡 Sellers will negotiate hard on transition duration and non-compete radius. A 6-month paid consulting arrangement at $5,000–$10,000 per month is often sufficient for operational transition, but relationship-heavy businesses may warrant 12 months. For SBA-financed deals, the SBA requires non-compete agreements from all owners of 20% or more. A 50-mile radius and 3-year term is standard and enforceable in most jurisdictions for this type of acquisition.

Conditions to Closing

Lists the material conditions that must be satisfied before the transaction can close, including financing approval, satisfactory due diligence, and third-party consents specific to the wedding catering industry.

💡 The material adverse change clause is particularly important in wedding catering acquisitions because a single large venue canceling its preferred vendor relationship or a cluster of booking cancellations between LOI and closing can materially alter the value of what is being acquired. Define 'material adverse change' specifically in the definitive agreement to include loss of preferred vendor status at named venues and net forward pipeline cancellations exceeding a defined dollar threshold.

Confidentiality and Non-Disclosure

Confirms that both parties are bound by confidentiality obligations with respect to the existence and terms of the proposed transaction, the seller's financial information, and client and venue relationships.

💡 Direct buyer contact with venue partners before closing — even with good intentions — can torpedo preferred vendor relationships and trigger staff departures. Establish a clear communication protocol in the LOI itself, specifying that the buyer may participate in venue introductions only in the seller's presence and with the seller's active facilitation. This protects both parties and preserves relationship continuity.