My preference is always to talk the seller through the offer. IOI is better than LOI, but depends on your stage of due diligence. Sometimes the broker will prefer you send them the offer so they can present it to the seller. You can plead your case to talk through it directly, but if they're adamant it's not the end of the world. As you build more of a relationship with the broker and seller, the interactions will become more meaningful and trusting. You'll need that when inevitably the really hard issues emerge.

So often, especially with the variability of broker communication skills, we float a very simple term sheet to see if it will engage the seller: buyer, seller, operating business to be acquired, purchase price inclusive of normalized working capital, acquisition structure, if there's an outlier that needs to be addressed in inventory or machinery, financing structure, and lease continuity if it involves a related party lease-back. If it sparks conversation and interest, you can move to an LOI and obtain any pre-diligence documents required to inspire your confidence in submitting an LOI.

From there, you can work with a lawyer to draft an appropriate LOI. Generally we draft the LOI to address the specifics of the business and concerns of ourselves and advisors. From there, the lawyer improves and also presents challenge scenarios. (This is when you want a lawyer that is a deal-maker, not a deal-killer.) If your first deal doesn't work, you have a good base template for your next attempt.