A letter of intent (LOI) is often completed after the first stage of negotiations in a purchase and sale transaction for a business.
The buyer and seller want to memorialize the principal terms in an LOI before the lawyers draft the entire purchase and sale agreement.
Some of the key provisions found in a letter of intent may include:
- Description of the primary transaction
- Pricing terms
- Description of related agreements
- Representations and warranties made by the buyer, seller, or both
- Obligations of the seller
- Obligations of the buyer
- Confidentiality obligations
- Non-solicitation obligations
- Termination provisions
- Whether the LOI is binding, non-binding, or only certain parts are binding or non-binding