The LOI is the deal in skeleton.

Most lawyers on independent sponsor deals treat the LOI as non-binding and therefore not critical.

Most LOIs are non-binding. They are also the deal in skeleton.

By the time the LOI is signed, the price is set, the rollover is set, the earnout is framed, and the exclusivity period is locked. Every fight in the next nine months gets fought inside the frame the LOI built.

Read the LOI like the SPA. Negotiate the LOI like the SPA. The deal that is going to close at the wire is the deal that was structured at the LOI.

Law school teaches the law of contracts. Contracts that are signed and binding are the focus. Non-binding agreements are taught as preliminary. The instinct is to spend the time on the binding documents.

That instinct translates into a deal-stage workflow where the LOI gets quick attention (one or two rounds of markup, mostly cosmetic) and the SPA gets exhaustive attention (eight or ten rounds of markup, line by line).

The deal-stage workflow is inverted from where the leverage actually is.

The LOI is signed when the independent sponsor has maximum leverage. The seller has just agreed to talk. The seller has signed an exclusivity. The seller has limited optionality.

The SPA is signed when the independent sponsor has minimum leverage. The deal has been in diligence for two months. The R&W carrier has bound. The lender commitment is in hand. The LPs have signed. The seller is exhausted. Both sides want to close. Asking for new terms at SPA stage means slipping the closing, which neither side wants.

If the independent sponsor wants to win on a specific term, there are two ways to do it.

Way one: put it in the LOI. The seller agrees in week two. The SPA reflects the LOI. Done.

Way two: leave it out of the LOI. Try to put it in the SPA in week eight. The seller's lawyer pushes back. The negotiation is hard. The seller's banker gets involved. The closing slips. The independent sponsor either wins the term at the cost of relationship and time, or gives up.

Way one is the correct path. Way two is what most lawyers default to.

How to spot whether your lawyer treats the LOI strategically. A strategic LOI lawyer asks the independent sponsor questions in the first 48 hours after engagement: "What is the rollover structure? What is the earnout metric? What is the exclusivity length? What is the management fee? What is the carry? What is the transaction fee?"

A non-strategic LOI lawyer asks for "the term sheet" and converts it into a standard LOI template. Signed in 48 hours.

If your lawyer falls into the second category, your independent sponsor practice will spend the next several years fighting the wrong fights at the wrong time.