Has anyone built fee shifting for QoE costs into a binding LOI?

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October 16, 2025

by a searcher in Miami, FL, USA

I’m trying to understand how others have handled QoE cost recovery when a deal falls apart before close. I have some reservations about a deal closing I may sign up under an LOI in a few weeks. Under SBA 7(a) rules, I know loan proceeds cannot be used to pay for diligence before closing, but I believe they can reimburse reasonable “Professional Fees” at closing if listed in the Sources and Uses (could I get a few people to confirm in the comments below?). That got me thinking. Has anyone structured a fee shifting clause in the binding section of their LOI, assuming other folks are structuring parts of their LOI to be binding like myself, where: 1. If the seller terminates without cause, breaches exclusivity, or the discovered QoE EBITDA is lower than a tipping basket threshold, they reimburse part or all of the buyer’s third party diligence expenses such as QoE. 2. If doing this, should the clause either references the QoE invoice directly, or the seller sign or acknowledges the QoE engagement so it is enforceable? If you have tried this: • How did your counsel draft it? • Did you need to write the seller into the QoE engagement? • How did your SBA lender view it at close or during underwriting? I would appreciate hearing what has worked or not worked for others. I am trying to find a fair balance between protecting against sunk costs and keeping sellers comfortable enough to sign.
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Reply by a searcher
from Brigham Young University in Salt Lake City, UT, USA
Thanks ^redacted‌ for the mention. I agree with Chris and Michael that it is impossible to get any seller that is represented to agree to this. There are proprietary searchers that have had some success with getting sellers to agree to pay for QofE, environmental and other reports in a broken deal situation. Carlos Santelli gave advice on how to do this on episode 318 of the Acquiring Minds podcast. Best of luck!
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Reply by a professional
in New York, NY, USA
I truly believe that if a seller puts up fraudulent numbers and a lender wont approve a loan on the business, then the seller should reimburse the buyer for all reasonable transaction fees. Going to see if lawyers can put this in LOI. Will this lead to more sellside QoEs? Sure. It will also lead to buyers going through more qualifications in order to submit a real LOI and make it get accepted. However if the deal dies because a buyer walks, the buyer should always pay the transaction fees.
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