A NARROW PRICE RANGE
Although buyers usually prefer not to include price for fear of ramifications later, most sellers want to see a price mentioned in the LOI. If this is the case, I recommend inclusion. The key is to establish a narrow price range. If you believe the business is worth $35 million, then the LOI should propose a price between $34 million and $36 million. If you were to suggest a range between $30 million and $40 million, the seller would remember only the $40 million, while your board will remember only the $30 million!
More important than the price range, though, is a detailed briefing on how you arrived at your numbers. This includes a detailed list of the three major inputs for the initial valuation that we discussed in Chapter ...
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