First LOI Signed!! Quick Questions

April 08, 2022

by a searcher in Glendale, AZ, USA

Hi everyone, just got my first LOI signed. Should I be contacting the seller directly going forward? The broker hasn't shared the seller's direct email or phone number yet, should I ask for them?

It's my first time running through all of this so I wanted to make sure.

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Reply by an investor
from University of Pennsylvania in Charlotte, NC, USA

In general, I would agree with the comment from ^redacted‌. Reading between the lines, it seems the broker may have shared less information and access than desirable, and the parties may have signed an LOI without the typical prior due diligence step of broker-arranged/hosted buyer-seller communication. If that is the case, most of your due diligence lies ahead, and a good broker will facilitate and expedite it as a professional intermediary. At some point, circumstances might support direct communication between buyer and seller, and a good broker will again be a facilitator. On the other hand if the broker adds little value and/or has a weak relationship with his seller client, presumably both you and the seller will realize this and proceed to communicate directly to everyone's benefit.

Reply by a searcher
from University of Western Ontario in Toronto, ON, Canada

Brokers can be a critical element to closing a deal, so I would not try to box them out of the lines of communication. Some brokers will take a lot of offence to you circumventing them and the seller may feel uncomfortable early on without distilling information through their broker. Brokers often are relied upon to translate some of the buyer's M&A speak/jargon and relay the importance of why you are asking for such exhaustive information. At the end of the day, brokers are paid a majority of their fees based on the success of a deal, so they are more on your side than they may initially appear and viewing them as a resource/conduit to having a successful deal closing can be beneficial.

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