THE RIGHT DOCUMENT FOR THE JOB
When to use a letter of intent
Use it before a purchase, investment, lease, strategic collaboration, or other substantial negotiation when a written outline will guide diligence. Obtain transaction-specific legal and tax advice.
BEFORE YOU START
What to have ready
- Parties, proposed transaction, assets or services, and business objective
- Indicative price or economics, assumptions, conditions, and diligence scope
- Timeline, milestones, approvals, financing or other conditions
- Exclusivity, confidentiality, publicity, access, and expressly binding terms
- Expiration, withdrawal, next documents, costs, and professional review plan
Deal outline
Summarize what may be bought, provided, invested in, or developed and the assumptions behind the headline economics. Identify information still needed for valuation or feasibility so the letter does not disguise an estimate as a settled term.
Diligence and path
List the records, meetings, inspections, approvals, and decisions needed before final documents. Give each milestone an owner and target date. State whether access is limited, confidential, or subject to conditions.
Status and safeguards
Mark provisions intended to bind, such as confidentiality or expenses, and identify the final documents that remain necessary. Carefully review exclusivity, publicity, breakup costs, and governing terms; local transaction rules can materially change the risk.
Common mistakes to avoid
- Assuming the heading controls enforceability despite firm language elsewhere
- Stating a headline price without assumptions, diligence conditions, or approvals
- Agreeing to exclusivity or publicity before setting duration and exit conditions
A FEW THINGS WORTH KNOWING
Letter of Intent questions, answered
Should a letter of intent include a price?
It can include an indicative price or range with assumptions and adjustment conditions. Label what remains subject to diligence, financing, approval, or definitive documents.
Can the parties negotiate with others afterward?
Only if no reviewed term restricts that activity. If exclusivity is proposed, define scope, duration, exceptions, and what ends it before signing.
What is the next document after an LOI?
That depends on the deal: a definitive purchase, investment, lease, services, or partnership document may follow. List the needed documents and the owner of each draft.
A draft is the beginning—not the final review.
Check names, figures, dates, and every obligation before you use or sign your document. For legal, employment, property, or financial matters, consult a qualified local professional when needed. This is an AI drafting tool, not an official government form or a guarantee of legal validity.