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Letter of intent for business transaction — How to guide by LegalZoom Staff

Letter of intent for business transaction — How to guide

by LegalZoom Staff updated  February 03, 2023  ·  9 min read

1. Overview

Before settling on the final terms of an agreement, negotiating parties may choose to provide a written starting point, setting out a first offer and some general terms. This initial written document is called a letter of intent (sometimes also called a memorandum of agreement or a memorandum of understanding). A letter of intent sets out the basic terms of a proposed transaction, including price, asset description, limitations, and closing conditions.

Some simple transactions may not need a letter of intent . The parties can simply proceed with the creation of their final agreement. In other cases, however, a letter of intent can determine major issues and make clear to the parties why the transaction is a good (or bad) idea. It can allow parties to start negotiations from a consensus point, easing the way for the more formal contract. Moreover, outside investors or other third parties may want to see evidence that an agreement is in the works. This will allow for an early start to the drafting of loan documents or obtaining of necessary approvals.

If you follow the enclosed sample and guidelines, you will have a simple document that sets forth the basic terms of your proposed transaction, limiting misunderstandings and showing mutual commitment to the deal. In every way, this lays the foundation for a focused and productive period of negotiation between the parties, and for a final and satisfying agreement.

2. Dos & don’ts checklist

3. Letter of intent for business transaction instructions

The following provision-by-provision instructions will help you understand the terms of your letter of intent. The numbers and letters below (e.g., Section 1, Section 2(a), etc.) correspond to the provisions in the letter. Please review the entire document before starting your step-by-step process. 

About the Author

LegalZoom Staff

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What Is a Letter of Intent?

A letter of intent (LOI) is a document that lists the terms of a preliminary commitment between two or more parties that desire to engage in business. The LOI is typically drafted and signed before the finalization of a definitive legal agreement and can be legally binding or non-binding depending on the wishes of the parties.

A LOI is similar to a ‘memorandum of understanding’ or a ‘term sheet,’ which are used for the similar purposes as a LOI, but are generally presented in a different format. A LOI is generally presented in the form of a letter sent from a sending party to a receiving party and giving the receiving party the opportunity to accept the terms of the LOI by countersigning the LOI.

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Letter of Intent Template

SBA.com® has created a sample LOI which you may download and customize to your liking.

One example where an LOI would be practical is in the merger and acquisitions (M&A) process, where one company plans to acquire another company. An LOI would address the desire and preliminary commitment for Company A to purchase Company B. The LOI would contain the proposed terms of the transaction and possibly a timeline in which the proposed transaction would occur. If Company A and Company B execute the LOI, they would then move onto a more advanced contracting phase which would firm up the commitments and terms of the transaction.

Why an LOI?

two hands gesturing over a spreadsheet printout

An LOI often facilitates the start of a business deal between the parties involved by establishing the foundational aspects of the deal. This helps get the process started as the parties move towards a full contract. The involved parties can draw out the fundamental terms quickly before they spend time, resources, and money on detailed agreements, due diligence, and/or third-party approvals. This makes an LOI especially useful in transactions that are either very complex or that the parties do not know all of the details about at the start of the transaction.

Some advantages of using an LOI include:

signing a document with a fancy pen

A Letter of Intent facilitates the start of a business deal or project between the parties involved by establishing the foundational aspects of a deal and setting the expectations moving forward. It brings a level of assurance to the involved parties and serves as a roadmap towards the signing of the final deal. While an LOI is typically non-binding, it can provide an opportunity to introduce certain binding clauses, such as certain confidentiality provisions.

Definition & Examples of Letters of Intent

How does a letter of intent work, components of a letter of intent, alternatives to a letter of intent.

Robert Daly / Getty Images

A letter of intent (LOI) is an initial, non-binding agreement between the parties in a proposed business deal. The LOI establishes the aspects of the deal the parties agree on, shows the parties are committed to making a final deal, and clears the way for a later, binding agreement called a definitive agreement.

What Is a Letter of Intent? 

An LOI is a starting point between two parties that are negotiating a business transaction, such as a sale or purchase , a merger, or a joint venture . A letter of intent clarifies the intentions of those involved in the deal and the major provisions that still must be agreed upon.

Though some of the provisions of the letter may be binding, the overall letter is not intended to be binding to both parties. The letter should state which parts of the agreement are binding while making it clear the letter is not a definitive agreement. If one of the parties fails to fulfill a binding part of the agreement, they may be responsible for damages to the other party.  

Either party can walk away at any point during the negotiation process based on new information that's discovered or a lack of agreement on a particular point.

The LOI describes what detailed information is necessary for the parties to make an informed decision about the deal. The letter may also be used to give the buyer the "right of first refusal." That means the seller may not reach a definitive agreement to sell itself or its subsidiary (or whatever the agreement is about) to another entity before it reaches such an agreement with this buyer.  

In addition to setting the stage for a possible final agreement, the letter of intent typically enables the buyer to begin its formal due diligence . The buyer is given complete access to the seller's financial accounts and other important company records, including information on customers, to verify everything the seller has told it is accurate.  

At this point in the negotiations, the parties probably won't want to get too specific. The KISS principle—"keep it short and simple"—is likely good advice when creating an LOI.

Some letters of intent have been found to be binding because the parties included provisions that were too detailed, which gave the LOIs the appearance of being final agreements.  

The exact structure of a letter of intent depends on the specific type of business deal involved, but it often includes several sections that outline the proposed deal in at least basic terms.

Introduction

The introduction of an LOI will include a statement of the purpose of the document. It also states the date upon which the document becomes effective. Various terms used in the document might also be identified and defined here.

Identification of Parties

The buyer and seller or the parties in the merger or joint venture are described completely so there's no possibility of confusion.

Transaction and Timing

This section includes a general description of the transaction, including the type of business deal that will be entered into. It can also include a purchase price, although this point may still be under negotiation. The parties may want to set some deadlines to ensure the process moves along reasonably quickly while still allowing for the possibility of extensions if both parties agree.

Contingencies

A contingency is something that must happen before something else happens. Common contingencies in business deals include the securing of financing by the buyer and the approval of boards of directors and/or a government agency. The parties may also agree on which state's laws will cover the final agreement between them.  

Due Diligence

A deadline should be set for this process used by the buyer and—more often in the case of a joint venture—sometimes the seller to go over the deal with a fine-toothed comb. The process involves checking records, verifying tax and legal documents, searching for unknown liabilities or pending litigation, and asking lots of questions.

The LOI should state that all entities in a position to provide information during the due diligence process will cooperate in good faith.  

Covenants and Other Binding Agreements

Most business deals include sub-agreements called restrictive covenants. If one party doesn't abide by them, it can damage the other party. You might want to include some or all of these agreements in your letter of intent, but they're not required.

A non-compete agreement protects one party in the deal, usually the seller, from competition by the other party. For example, if the prospective buyer learns information about the seller's business or its customers and then starts a business using that information, this competition would be potentially damaging to the seller.

A non-disclosure or confidentiality agreement prevents one party from revealing information about the other party gained in the due diligence process.

A  non-solicitation agreement  protects one party against the other party soliciting employees or customers during or after the due diligence process.

Exclusive dealing language states that neither party will negotiate with other potential buyers or sellers for a certain period of time. 

A section devoted to expenses and costs typically states that each party will pay for its own expenses incurred during the process. These costs might include legal and accountant fees, costs for documents, and travel costs.

If a deal is very simple, a letter of intent could be created using a template found online. However, it's almost always preferable to hire an experienced attorney to create the document.

The parties should select a closing date and include in the LOI language saying the parties agree to abandon the deal if it isn't finalized by that day.

The parties should sign and date copies of the letter of intent after they have agreed to its terms, and all parties should receive a copy.

The signing should be witnessed by a third party, preferably a notary republic.  

A term sheet is sometimes used as a synonym for an LOI, but it typically differs in that it's just a list of terms for the deal rather than a fully fleshed-out letter.  

An indication of interest (IOI) or expression of interest (EOI) is an informal, non-binding letter stating an interest in carrying out a transaction. If an IOI is part of a deal negotiation, it would precede an LOI.

An IOI is most often sent by a proposed buyer to a company it's interested in acquiring. The IOI may include a purchase price range—expressed in dollars or as a multiple of earnings before interest, taxes, depreciation, and amortization (EBITDA)—and might provide some information on the buyer's sources of funding.  

Key Takeaways

LegalZoom.com. " Letter of Intent for Business Transaction — How To Guide ." Accessed Aug. 7, 2020.

Nolo. " What Is the Right of First Refusal? " Accessed Aug. 7, 2020.

Capstone Strategic, Inc. " What Happens After You Sign a Letter of Intent? " Accessed Aug. 7, 2020.

Nolo. " How to Draft a Letter of Intent (LOI) or Term Sheet ." Accessed Aug. 7, 2020.

LawInfo. " Letters of Intent and Term Sheets ." Accessed Aug. 7, 2020.

Axial. " What to Expect From the Indication of Interest ." Accessed Aug. 7, 2020.

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How to Use a Letter of Intent (LOI) to Make a Deal

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What Is a Letter of Intent (LOI)?

A letter of intent (LOI) is a document declaring the preliminary commitment of one party to do business with another. The letter outlines the chief terms of a prospective deal. Commonly used in major business transactions, LOIs are similar in content to term sheets . One major difference between the two, though, is that LOIs are presented in letter formats, while term sheets are listicle in nature.

Key Takeaways

Letter of Intent (LOI)

Understanding a letter of intent (loi).

LOIs are useful when two parties are initially brought together to hammer out the broad strokes of a deal before the finer points of a transaction are resolved. LOIs often include provisions stating that a deal may only go through if financing has been secured by one or both parties, or that a deal may be squashed if papers are not signed by a certain date.

Since LOIs typically discuss potential points of deals that have yet to be cemented, they are almost universally intended to be non-binding .

LOIs can be iterative in nature. One party may present an LOI, to which the other party may either counter with a tweaked version of that LOI or draft a new document altogether. Ideally, by the time both parties come together to formalize a deal, there will be no surprises on either side of the table.

Many LOIs include  non-disclosure agreements (NDAs) , which contractually stipulate the components of a deal both parties agree to keep confidential, and which details may be shared publicly. Many LOIs also feature no-solicitation provisions, which forbid one party from poaching the other party's employees.

A letter of intent is usually drafted and signed while negotiations between parties are ongoing so that the final terms of a deal might vary from what was agreed upon in the letter of intent. Due diligence is conducted by both parties before doing business. It is a prudent business practice to complete due diligence before signing a letter of intent.

Purpose of a Letter of Intent (LOI)

Letters of intent may be used by different parties for many purposes. Parties can use an LOI to outline some of the basic, fundamental terms of an agreement before they negotiate and finalize all the fine points and details. Furthermore, the LOI may be used to signal that two parties are negotiating a deal such as a merger or joint venture (JV) .

Overall, LOIs aim to achieve the following:

Applications of a Letter of Intent (LOI)

In the context of business deals, LOIs are typically drafted by a company's legal team, which outlines the details of the intended action. For example, in the merger and acquisitions (M&A) process, LOIs detail whether a firm plans to take over another company with cash or through a stock deal.

Letters of intent also have applications beyond the business world. For example, parents may use them to express the expectations they have for their children in the event both parents die. Although they aren't legal documents like wills, LOIs may be considered by family court judges responsible for legislating what happens to the children under such circumstances.

LOIs are also used by those seeking government grants , and by highly sought-after high school varsity athletes. These individuals frequently draft LOIs to declare their commitments to attend particular colleges or universities.

Cornell Law School Legal Information Institute. " 45 CFR § 1160.9 - Letter of Intent ."

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Letter of Intent Template

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Sample Letters of Intent

In business, a letter of intent is commonly used as an initial proposal to the other party. These proposals may include purchases, acquisitions, contracts and mergers. While not binding, a letter of intent can help clarify the points of a deal or provide protection should a deal collapse.

Whatever may be your case, you can use our free Letter of Intent Template as a guide. Continue reading below, where you will find two different sample letters of intent as well as additional tips and resources.

Letter of Intent Template

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Simplify the process of writing a letter of intent by starting with this template. It outlines the different sections and topics that should be included in your letter.

Tips: How to Write a Letter of Intent

Business: Sample Letter of Intent to Purchase

Ryan Francom CFO Siding and More Inc 123 Anywhere Street Somewhereville, Best State 88889

Bill Stevenson President Rain Gutters R Us 123 Anywhere Street Somewhereville, Best State 88889

Dear Mr. Stevenson,

We hereby submit a letter of intent to purchase your business Rain Gutters R Us, its inventory and other assets. We envisage that the principal terms of the proposed transactions would be substantially as follows.

We would acquire Rain Gutters R Us including its facilities located at 123 Anywhere Street, its logo, brand, brand equity and customer lists. Furthermore, we would acquire all office and field equipment and inventory. As part of the deal, we would assume the current outstanding debt of $50,000.

As consideration for this, we would provide compensation of $400,000 as follows:

As part of this letter of intent, we would require that you cease shopping for other buyers for a period no less than 60 days to provide us time to complete due diligence and finalize the agreement. We would also require that you not disclose our intent to purchase until after the purchase agreement has been completed and we can issue a joint press release.

This letter is not an official purchase agreement. All of the terms and conditions of the proposed transaction would be stated in the Purchase Agreement, to be negotiated, agreed and executed by both parties.

If we are selected as a prospective buyer, we anticipate that from the selection date to the closing will take no more than 45 days.

Ryan Francom

Letter of Intent to Accept Scholarship

Scott Young 123 Anywhere Street Somewhereville, Best State 88889

Mike Sullivan Head Coach Awesome University Football Program 123 Anywhere Street Somewhereville, Best State 88889

Dear Coach Sullivan,

I wanted to confirm to you in writing my intent to accept the football scholarship offered to me by Awesome University. I am excited to put on the colors of the fighting lobos and begin practicing with you this fall.

Please send me information that will help me get ready for the season including information about enrollment, housing and training. If you have further questions, I can be reached at (123) 456-7890.

Thank you again for this opportunity and I look forward to seeing you again this summer.

Scott Young

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Free Letter of Intent (LOI) Template

Take advantage of our Letter of Intent template to finalize every detail of a future written agreement. With our outline, you can formally state your intention to create a legally binding contract.

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What is a Letter of Intent

Letter of intent example, how does a letter of intent work, how to write a letter of intent, letter of intent vs. cover letter, sample letter of intent, other business forms, letter of intent faqs.

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A Letter of Intent, or LOI, is a legal document that establishes the intentions and conditions for two or more parties to enter into a contract. It can be used as a precursor to a formal contract.

A Letter of Intent does the following : 

Communicates each party’s desire to formalize the agreement.

Establishes details before signing a contract.

Gives reassurances to each party that all intentions are sincere. 

Provides a framework for future discussions. 

Assists the parties in verifying the details of the agreement. 

A Letter of Intent is useful when you want to show good faith, and help to progress the process of creating a formal agreement . 

The document will usually set a limit for creating and signing a contract. 

There are various types of LOIs , such as for real estate purchases, attending college or graduate school, to hire an employee, and many other types of arrangements. 

Use our   Letter of Intent template to create a document that includes all the terms and conditions of a future contract. 

Is a Letter of Intent legally binding?

A Letter of Intent is normally non-binding . However, it does serve as an important means for establishing the terms and conditions for entering into a formal agreement.

For it to be enforceable, you would need to ensure there are terms that state the document is a binding agreement. 

There could be certain consequences if a party does not comply with the agreed-upon terms of the letter if the document is binding. 

For example, If one party drops out of the arrangement, they could be held financially liable for any financial damage the other party receives. 

To help clarify what a Letter of Intent should look like, we have included an example of an LOI . 

To have a better understanding of how to outline your legal document, you can review the example of a Letter of Intent to purchase property below. 

[Your name]

[Your address]

[Contact information]

Effective date

[Seller’s name]

[Seller’s address]

[Seller’s contact information]

This letter represents the terms and conditions to purchase the property located at [address] for $[price], and expect that this letter will serve as a formal agreement between [buyer] and [seller] under the laws of the state of [state]. 

The payment will be paid in [purchase terms].

[The buyer] has stated that their ability to acquire the property is [conditional or not conditional] on receiving financing from a bank. 

The closing will be on [date], or before, if agreed mutually. Any costs related to the closing will be provided by the [buyer/seller/both parties]

The possession of the property will be given on [date] or before, if agreed mutually.

Once the legally binding agreement has been made, the buyer has the right to select someone to inspect the property on their behalf within X days. 

This letter will be deemed non-binding, and the terms and conditions of this agreement are for the sole use of creating a future binding contract. 

If you agree with the terms and conditions, sign and return a copy of this letter by [date]. 

[Buyer’s signature]

[Seller’s signature]

There are various steps to follow to create a Letter of Intent and then complete a transaction. 

Review and then complete the following steps to ensure your Letter of Intent is created correctly .  

Negotiate the terms : Hash out the terms and conditions such as the price and payment details with the other party. 

Draft the LOI : Create your Letter of Intent, and ensure you add as many agreed terms as possible. Ensure you state if the letter will be binding or non-binding. 

Conclude the arrangement : Make a legally binding agreement based on the terms of the Letter of Intent, or finalize the transaction immediately. 

By doing these steps correctly and in order, you will have a formal agreement in place before drafting a contract . 

Unless you state otherwise in your LOI, the agreement will not be legally enforceable until you sign a legally binding contract .

A Letter of Intent should include all the basic elements that would be included in its corresponding formal contract. 

These include the names of each party, their contact information, the scope of work, deadlines, milestones, payment terms, and any other pertinent details.

To understand what to include in a Letter of Intent, review the following step s.

Enter your name and address

Write your full name and your address at the top of the document. This will serve as a return address to receive a copy of the letter in the future. 

Include the name and address of the recipient

Add the name and address of the recipient, usually the seller. If it is a Letter of Intent for a job, this is where the employer’s information goes. 

Ensure you add both the full name and full address to avoid any confusion. 

State if the letter is binding or non-binding

Make sure to write a clear statement regarding if the letter will be binding or not. With a clear statement, both parties and any legal representatives can know if the document is enforceable or not. 

Introduce the two parties

Add all the basic information regarding the parties involved in the LOI. This means, including your full name as well as the other party’s full name. 

Also, include your full address and the other party’s complete mailing address. Enter the payment details.

Add payment terms

Include when one party will provide payments and how often. 

In other words, how much the total amount is. Include if it will be paid all at once or in monthly or weekly payments . 

State if financing is a requirement

Enter if bank financing will be a requirement for the buyer to complete a purchase. You can add if the agreement will be conditional upon the buyer obtaining financing or not. 

Indicate the governing state

Add the state jurisdiction that the Letter of Intent will fall under. This is important as certain states have different laws, and they may affect your LOI. 

Sign the document

Add the signatures of both parties to the bottom of the document. Both you and the other party must sign the Letter of Intent. 

Provide your signatures , along with the date and your names in print. 

Download LawDistrict ’s legal template to ensure you do not leave out any essential details in your letter. 

A Letter of Intent can be used by a job applicant if you would like to be offered an employment contract . It mentions why the person writing the letter would like to work for a certain company.

This has a lot in common with a cover letter, and while some parts are very similar, there are key differences . 

Check the table below to understand how to differentiate between a Letter of Intent and a cover letter. 

Cover letters are used to apply for a specific position. If you would like to let a company know you would like to work for them, but they are currently hiring, you can send a Letter of Intent.

To provide a better understanding of how to write a Letter of Intent correctly, you can review a sample of the document below.

Apart from a Letter of Intent, some other legal documents can help you formally complete a transaction. 

Using LawDistrict, you can receive help in similar situations by using related documents such as:

Purchase Agreement

Bill of Sale

Invoice template

Non-Disclosure Agreement

Review these documents to help you create your Letter of Intent or assist you in similar circumstances.

To further clear up any misunderstandings you may have about LOIs, we have answered the most common questions on the subject . 

Review the following answers to the most frequently asked questions regarding Letters of Intent.

How long should a Letter of Intent be?

The length of a Letter of Intent depends on why it is written in the first place . Depending on what you are purchasing or for who it is, it may be longer or shorter than other letters. 

Generally, a Letter of Intent should be no longer than 2 pages . This type of document does not need to be extremely long. 

What is the difference between an LOI and an LOA?

A Letter of Intent and letter of acceptance serve different purposes. A Letter of Acceptance (LOA) is a letter that confirms the acceptance of a bid or terms and conditions. 

This is different from a Letter of Intent, which typically serves as a non-binding agreement .

Who Prepares a Letter of Intent?

A Letter of Intent could be prepared by anyone . There are other methods available, such as going to a lawyer. 

However, you could end up paying excessive legal fees by asking a lawyer to write your Letter of Intent. 

By using our legal template, you can make the process much cheaper and simple.

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15+ Business Letter of Intent – Word, PDF

In simple terms , a business letter of intent can be described as a document of agreement signed by parties involved prior to a big merger, takeover or buyout which is about to happen between two or more parties involved . A business intent letter is also referred to as purchase letter of intent . The paperwork states that the parties involved have reached an agreement and negotiations are about to open and the deal will be close with a legal contract soon.

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Letter of Intent (LOI)

This article outlines an example of a Letter of Intent (LOI).

What is a Letter of Intent (LOI)?

A Letter of Intent (LOI) is a short non-binding contract that precedes a binding agreement, such as a share purchase agreement or asset purchase agreement ( definitive agreements ).  There are some provisions, however, that are binding such as non-disclosure, exclusivity, and governing law.

The main points that are typically included in a letter of intent include:

Letters of intent are often produced by investment bankers on behalf of corporate issuers .  Below is an example of an LOI template.

Letter of Intent (LOI) example and template

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Letter of Intent Template – Example

Note: This Letter of Intent (LOI) template is only for educational purposes and should not be used for any other purpose.

CONFIDENTIAL

BY ELECTRONIC MAIL

We are writing to provide a letter of intent from OUR NAME Inc. (“Shorter Name”) in respect of a transaction (a “Transaction”) with TARGET NAME Inc. (“TARGET NAME” or the “Company”).  We appreciate the time and energy you and your team have afforded us in discussing this opportunity and the information that has been provided thus far.

As we continue to spend time evaluating TARGET NAME, we believe that OUR NAME will bring unique value and capabilities to the Company, accelerating the development and growth of TARGET NAME.  We believe we could drive TARGET NAME’s growth strategy, by doing X, Y, and Z.

Transaction Overview and Structure

Based on our preliminary review of the information provided and subject to the conditions set forth below, OUR NAME is pleased to submit this non-binding letter of intent (the “Proposal”) for a transaction with TARGET NAME.  We propose purchasing 100% of the equity of the Company, including all assets and liabilities, in such a way that TARGET NAME still has significant exposure to future upside.

We believe that in order for this transaction to be successful our interests must be aligned.  With that in mind, we have designed a compensation structure that allows all parties to benefit from our future success in an equitable way.

We offer a total purchase price of $XXX million consisting of:

Illustrative Timeline

Given the importance of timing for TARGET NAME in respect to this transaction we have proposed a high-level timeline as follows:

Due Diligence Process

This Transaction is of the highest priority for us, and we are prepared to proceed as quickly as possible; it is important that you make that same commitment to us before we expend additional time and resources pursuing this opportunity.  OUR NAME has developed an investment thesis and an understanding of the business through our initial due diligence, including several conversations with management, as well as a preliminary data review.  We envision our remaining due diligence would include, but would not be limited to, commercial, accounting, and financial due diligence, as well as customary legal, tax, and regulatory work.  With the Company’s full cooperation, we believe we can expeditiously complete our due diligence and present TARGET NAME with a definitive agreement within eight weeks from the date our Proposal is accepted.

Exclusivity & Confidentiality

If the Company is interested in pursuing the proposed Transaction, we would require sixty days of exclusivity (the “Exclusivity Period”) to finalize our due diligence and negotiate definitive documentation, subject to a 60-day extension if OUR NAME is working in good faith to consummate the transaction at the initial expiration date.  In light of our Proposal’s premium valuation, we believe that granting exclusivity at this stage will benefit the Project and its Shareholders.  In order to complete our due diligence and to secure the additional requisite capital, we will need reasonable access to Company information and the ability to share that information with our prospective equity partners and debt financing sources in a manner that protects the confidentiality of your information and our discussions.  A draft form of the exclusivity and confidentiality agreement is enclosed as Exhibit A for your consideration (the “Exclusivity and Confidentiality Agreement”).  We emphasize our desire to complete the proposed Transaction in an expeditious and efficient manner and our readiness to mobilize resources to move ahead quickly.  To that end, and assuming we sign this letter in advance, we would suggest an organizational meeting as soon as possible to agree on the work plan during the Exclusivity Period.

Non-Binding Commitment

This non-binding indication of interest is confidential and may not be disclosed other than to you, the Company, and its advisors on a strictly need-to-know basis.  It is not intended, and shall not be deemed, to create any binding obligation on the part of OUR NAME, or any of its affiliates, to engage in any transaction with the Company or to continue its consideration of any such transaction.  Subject to the immediately following sentence, none of the parties shall be bound in any way in connection with this letter unless and until the parties execute a definitive agreement, and then shall be bound only in accordance with the terms of such agreement.  Notwithstanding anything to the contrary in this letter, the Exclusivity and Confidentiality Agreement, once executed by the parties thereto, shall constitute binding obligations of the parties thereto.

We are very excited about the potential opportunity and hope that you are equally interested in proceeding in a constructive and expeditious dialogue.  We look forward to working with you to complete this transaction.

Very truly yours,

[Signature]

Company Name

Note: This letter of intent  (LOI) template is only for educational purposes and should not be used for any other purpose.

More Resources

Drafting a letter of intent (LOI) is an important skill for professionals in investment banking , private equity , and corporate development .

To take your corporate finance career to the next level, you may find these resources helpful:

For more helpful resources, check out CFI’s Template Marketplace !

intent letter business

Letter of Intent

Jump to section, need help with a letter of intent, what is a letter of intent.

A letter of intent is a formal letter that expresses your intentions to do something, such as apply for an educational program or job or make a purchase. It could also be used to clarify specific points in a business transaction. A job candidate might send a letter of intent to a business if they wanted to work for the company, but there wasn't a specific job they were applying for. The candidate might submit a letter of intent along with a general application.

The letter of intent shows interest in the other party and deals with them in a respectful and professional manner. It states your intentions without actually entering into an agreement regarding the business arrangement. When a letter of intent is used between businesses, it allows the individual parties to define their relationships and their future plans without involving lawyers and generating significant legal costs. Though the document isn't legally binding, it is a show of good faith.

Other Names for a Letter of Intent

A letter of intent is sometimes referred to as a:

Types of Letter of Intent

Here are a few specific examples of different types of letters of intent:

Letter of Intent Templates

Letter of intent vs. cover letter.

Admittedly, letters of intent can be similar to cover letters when used for the purpose of finding a job. However, there are some differences. A letter of intent:

Cover letters, on the other hand, tend to be

How to Write a Letter of Intent

Here are the basic steps you should follow to write a general letter of intent that could be used to clear an intent to purchase or to plan a business arrangement:

Letter of Intent Sample for Asset Purchase (Non-Binding)

Dear [NAME]:

This letter of intent (“Letter of Intent”) sets forth proposed terms of [BUYER NAME] (“Buyer”) purchase of all assets related to [ASSET NAME] and you (“Seller”). Buyer and Seller are referred to collectively as the “Parties.”

This letter does not address all matters upon which agreement must be reached for the proposed transactions to be consummated. The Parties intend to execute a definitive Asset Purchase Agreement and other necessary documentation (the “Definitive Agreements”) at a later date.

The Parties agree that this Letter of Intent is intended as only outline of certain terms and should not be considered binding on both Parties.

In general, the proposed transaction would be as follows:

If the foregoing reflects the present intention of, and is generally acceptable to you, please execute and date the enclosed counterpart signed by Buyer and return such executed counterpart to the undersigned.

Very truly yours,

_________________________

Date: _____________

Accepted: _________________________

Tips for Writing a Letter of Intent

Here are some tips you can use to help you write a letter of intent:

If you need help drafting a letter of intent, Contracts Counsel has a team of fully vetted lawyers who have worked in over 30 different industries. They can also help you negotiate or review contracts to make sure you're legally protected during any business deal. Contact us today to get started.

Meet some of our Letter of Intent Lawyers

Stacey D. on ContractsCounsel

I enjoy helping businesses of all sizes succeed, from start-ups to existing small and medium sized businesses. I regularly advise corporate clients on a variety of legal issues including formation, day to day governance, reviewing and drafting business contracts and other agreements, business acquisitions and sales, as well as commercial and residential real estate issues, including sales, purchases and leases. As an attorney licensed in both Michigan and Florida, I also advise clients on real estate issues affecting businesses and individuals owning real property in either state, whether commercial, residential or vacation/investment property. I also regularly assist nonprofit organizations in obtaining and maintaining tax exempt status, and provide general legal counsel on all matters affecting public charities, private foundations and other nonprofit organizations.

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Pura Rodriguez, JD, MBA is the President and Managing Partner of A Physician’s Firm, based in Miami. She represents healthcare providers from different specialties in a broad range of issues, including contract review, business planning and transactions, mergers and acquisitions, vendor and contract disputes, risk management, fraud and abuse compliance (Anti-Kickback Statute and Stark), HIPAA compliance, medical staff credentialing, employment law, and federal and state regulations. She also assists providers in planning their estates, protecting their assets, and work visa requirements.

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Letter of intent

Location: california, turnaround: a week, service: drafting, doc type: letter of intent, number of bids: 4, bid range: $300 - $800, m&a engagement letter, location: florida, turnaround: less than a week, bid range: $650 - $1250, related contracts.

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