Send a Letter of Intent (LOI)
The LOI is non-binding but it sets the tone. Get the headline economics agreed in writing before spending money on lawyers and accountants.
What a good LOI covers
- Purchase price and how it's calculated (multiple of EBITDA, % of revenue, etc.)
- Structure — share purchase or asset purchase
- Cash at close vs deferred / earn-out / vendor financing
- Working capital target (the 'normal' level of stock + debtors – creditors)
- Exclusivity period — 60–90 days is standard
- Conditions precedent (board approvals, financing, regulatory consents)
- Confidentiality and break-fee if either side walks unfairly
Share vs asset purchase has huge tax + liability consequences. Defaulting to 'share purchase' is convenient but you inherit every skeleton. Asset purchases are cleaner but trigger stamp duty and may require contract assignments.
The information in this guide is provided for general guidance only and is subject to change. Fees, timelines, and regulatory requirements in Kenya are updated regularly. Before acting, please confirm details with the relevant authority (KRA, eCitizen, BRS, county government, or other regulator) or speak with a qualified MyBiashara advisor. MyBiashara is not liable for decisions made solely on the basis of this content.
