Letter of Intent Template & Negotiation Guide for Window & Door Replacement Acquisitions

1. Parties and Transaction Overview

Identify the buyer entity (or entity to be formed), the seller, and the legal name of the target business. Specify whether this is an asset purchase or stock purchase — the vast majority of window and door replacement acquisitions close as asset purchases to allow buyers to exclude undisclosed warranty liabilities and legacy installer misclassification exposure.

💡 Sellers in this industry sometimes prefer a stock sale for tax reasons. Push back firmly if there are open warranty claims, subcontractor 1099 misclassification exposure, or unresolved BBB complaints — asset purchase protection is worth the negotiation friction. If the seller insists on stock, price in an indemnification escrow of 10–15% of purchase price held for 18–24 months.

2. Purchase Price and Valuation Basis

State the proposed total enterprise value and the basis on which it was calculated. Window and door replacement businesses trade at 3x to 5.5x trailing twelve-month EBITDA. Clearly define what EBITDA figure the offer is based on and note that final price is subject to confirmation during due diligence. Include a working capital peg reference if applicable.

💡 Sellers of window companies often present add-backs for owner compensation above market replacement cost, vehicle expenses, and owner-paid health insurance. Scrutinize every add-back during due diligence. Market replacement cost for an owner-operator performing sales and estimating in this industry is $80,000–$120,000 annually. Do not accept add-backs for the delta between owner draw and replacement cost unless a qualified sales manager is already in place and documented.

3. Deal Structure and Financing

Outline how the purchase price will be funded, including SBA financing, buyer equity injection, seller carry note, and any earnout component. This section signals to the seller how realistic and bankable your offer is and sets expectations for the closing timeline.

💡 Most SBA lenders financing window and door replacement acquisitions will require the seller note to be on full standby for 24 months. Sellers who resist seller carry often signal they are not confident in trailing EBITDA sustainability — use this as a negotiation lever. For PE-backed roll-up acquisitions, replace SBA language with equity and revolving credit facility terms and structure earnouts around installed revenue milestones or EBITDA margin retention, not top-line revenue alone, to avoid incentivizing low-margin volume jobs.

4. Assets Included and Excluded

Define the assets being purchased with specificity. For a window and door replacement business, this includes customer lists, CRM and lead data, supplier dealer agreements, branded product certifications, vehicles, installation equipment, and any owned or licensed software. Explicitly exclude assets the seller will retain, including personal vehicles, real estate (if any), and any non-compete-encumbered accounts the seller is retaining.

💡 The most commonly disputed assets in window company transactions are: (1) Google Business Profile and review history — confirm this can be transferred to a new entity login, (2) manufacturer dealer agreements — verify in writing with Andersen, Pella, or the relevant manufacturer that dealer status is transferable and what approval process is required, and (3) the company phone number — seemingly minor but critical for inbound lead flow. All three should be confirmed assignable before the LOI is signed, not during due diligence.

5. Liabilities Assumed and Excluded

State clearly which liabilities the buyer will assume and which remain with the seller. In window and door replacement acquisitions, warranty obligations on past jobs and installer misclassification exposure are the two most significant liability categories to address explicitly.

💡 Warranty liability is uniquely complex in window and door replacement because manufacturer product warranties and installer workmanship warranties are separate obligations. Request a full warranty claims log going back 5 years, categorized by product versus workmanship. If workmanship warranty claims exceed 2–3% of annual revenue, negotiate a warranty reserve escrow at closing. For subcontractor-heavy businesses, request copies of subcontractor agreements to assess indemnification provisions and certificate of insurance history.

6. Due Diligence Period and Access

Define the length and scope of the due diligence period. For a window and door replacement business in the $1M–$3M revenue range, 45–60 days is standard. Larger or more complex businesses with multiple crews or multiple service territories may warrant 75–90 days.

💡 The most revealing due diligence items in this industry are lead source analytics and installer classification records — not the P&L. Ask for Google Ads account read access, Angi and HomeAdvisor spend history, and a breakdown of revenue by lead source over three years. This will reveal margin compression trends that are not visible on the income statement. Also request the installer roster with W-2 vs. 1099 classification documentation — misclassified subcontractors doing full-time installation work create IRS and Department of Labor exposure that can exceed six figures in back taxes and penalties.

7. Exclusivity and No-Shop Provision

Request an exclusivity period during which the seller will not solicit or entertain offers from other buyers. This protects the buyer's investment of time and due diligence costs. Standard exclusivity in lower middle market home services deals is 45–90 days.

💡 Sellers who resist exclusivity or request a shorter exclusivity window than your due diligence period are a red flag. In a competitive process where a broker is representing the seller, you may need to accept a shorter exclusivity window of 30–45 days — negotiate for a right to match any competing offer within 5 business days if exclusivity lapses before a definitive agreement is signed.

8. Seller Transition and Non-Compete

Define the seller's post-closing obligations, including a transition consulting period and non-compete and non-solicitation terms. This is especially critical in window and door replacement businesses where the owner is the primary sales driver and holds key relationships with homebuilders, contractors, or referral partners.

💡 The non-compete is one of the most negotiated terms in this industry because many selling owners are relatively young (55–65) and may want to return to the trades. SBA lenders require a minimum 2-year non-compete; aim for 3–5 years in primary service territory. Pair the non-compete with a paid consulting agreement if the seller is resistant — paying $5,000–$10,000 per month for a 6-month transition is cheap insurance for an acquisition where the seller holds all supplier and crew relationships personally.

9. Conditions to Closing

List the key conditions that must be satisfied before the transaction can close. This protects the buyer from being obligated to close if material issues emerge during due diligence or if financing falls through.

💡 Always include manufacturer dealer agreement transferability as an explicit closing condition. We have seen acquisitions of Andersen and Pella dealers fall apart or be significantly delayed because the buyer assumed dealer status was automatically transferable — it is not. Some manufacturers require territory reviews, new applications, or minimum volume commitments before granting dealer authorization to a new entity. Start that process in parallel with due diligence, not after.

10. Confidentiality and Governing Law

Confirm that the terms of the LOI and all information exchanged during due diligence remain confidential. Reference the governing state law for any disputes.

💡 Make clear which provisions are binding versus non-binding. Exclusivity, confidentiality, and any break-up fee provisions should be explicitly binding. The purchase price, structure, and other terms remain subject to due diligence findings. If a broker is involved, confirm in writing that the LOI supersedes any prior term sheets or letters of interest submitted during the marketing process.