Why Founders Should Build A Gap Table Before The Letter Of Intent Arrives

A founder reads the headline number on a letter of intent as the deal. The piece argues it is closer to the opening of the real negotiation. In one case, an LOI that implied about 7.2x EBITDA settled closer to 6.5x by the time the money moved. Nothing went wrong. That is simply how the process works when the seller has not mapped it in advance.

The fix is a gap table, built before the LOI conversation, not after. Five columns, one row for each item a buyer is likely to re-price. Line Item: the specific issue the buyer will raise, working capital or an earnings adjustment. Why: the buyer's underwriting logic, which runs differently for private equity, a strategic, or a family office.

Fix: what the founder can still change before the conversation. Position: what cannot change but can be framed so it costs less at the table. Concede: the items the founder has already decided to give, so they are given on purpose rather than surrendered under pressure.

The pattern is common enough to measure. The firm's research finds that 73% of lower-middle-market deals carry at least one post-LOI price adjustment, averaging about 18% of enterprise value. A founder who has built the table sees those adjustments coming and negotiates from a position. A founder who has not meets them one at a time, late, and usually loses.

The reframe is the whole point. Treat the letter of intent as a midpoint. The gap between that number and the close is not the buyer being difficult. It is work the seller could have done first.