I recently appeared on an episode of the Private Equity FunCast: “The Art (and Science?) of the LOI” to talk deal terms with private equity masters Devin Mathews and Jim Milbery.  This well-spent hour got me thinking about how confusing some of the deal terms in a Letter of Intent (LOI) must be for first time sellers.  As a result, we are launching a series of blog posts that will deconstruct the LOI into easily understandable parts. In this series, we will be covering the following topics: The purchase price and how it is calculated; The structure of the transaction; Key tax issues; Key deal terms, including working capital, representations and warranties, and indemnification/escrow arrangements; and The legal “mumbo-jumbo.” We covered much of this during the FunCast, but will take a deeper dive here with a more intense focus. The Purchase Price and how it is Calculated For most business sellers the purchase price is the purpose of the deal – cashing in on...

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