A Letter of Intent (LOI) is used when two parties are entering into a contract that has not been finalized. An LOI is an agreement that outlines the basic actions to be taken with a transaction and helps clarify any complex transactions. A Letter of Intent can also include the basic terms and conditions of the contract, but takes into consideration that negotiations are still in progress. Full details of a transaction are not typically included in a Letter of Intent, in order to keep the document from becoming a binding legal document.
Our attorneys draft LOIs for our clients when they are negotiating a business merger or when they are negotiating a sale of a business. The purpose of a Letter of Intent is to show that the seller, buyer, and potential lenders are serious about the transaction. Because a Letter of Intent includes confidential information, the LOI should include a non-disclosure and confidentiality clause. Also included in an LOI is a time frame that the parties expect negotiations to be complete.
LOIs may also help identify problems or obstacles with a certain transactions, where the parties and potential lenders will require more information to move forward with the transaction. Other names for a Letter of Intent may include:
• Intent Letter;
• Purchasing Letter;
• Letter of Intent to Purchase; or
• Plan to Purchase Letter.
Our attorneys may also draft the following documents that can be included with a Letter of Intent:
• Buy Sell Agreement;
• Sale of Business Assets Worksheet;
• Purchase Agreement; and
• Deal Agreement.