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 nội dung purchase agreement or asset purchase agreement (definitive agreements). There are some provisions, however, that are binding such as non-disclosure, exclusivity, and governing law.

Bạn đang xem: Letter of intent: what is an loi and formats

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

Transaction overview & structureTimelineDue diligenceConfidentialityExclusivity

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

*

Download the không tính tiền Template

Enter your name and e-mail in the form below or follow the link to download the miễn phí LOI template now!

Letter of IntentTemplate – Example

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

CONFIDENTIAL

Date

BY ELECTRONIC MAIL

NAME

ADDRESS

Dear Name,

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 & 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 chất lượng value và capabilities khổng lồ the Company, accelerating the development và growth of TARGET NAME. We believe we could drive TARGET NAME’s growth strategy, by doing X, Y, và Z.

Transaction Overview & Structure

Based on our preliminary nhận xét of the information provided và subject khổng lồ the conditions phối forth below, OUR NAME is pleased lớn 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 khổng lồ 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 khổng lồ benefit from our future success in an equitable way.

Xem thêm: Những Hình Ảnh Công Chúa Xinh Đẹp, Dễ Thương Nhất Thế Giới, Ảnh Công Chúa Xinh Đẹp, Dễ Thương, Đáng Yêu Nhất

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

$XXX of performance upside – performance shares of OUR NAME (an additional XX%, approximately), issued upon achieving the following targets/milestones:Milestone #1 in year 20XXMilestone #2 in year 20XXIllustrative Timeline

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

Date: Operational due diligence và OUR NAME visit khổng lồ TARGET NAME’s head officeDate onward: Drafting of Definitive AgreementDue Diligence Process

This Transaction is of the highest priority for us, và we are prepared to lớn proceed as quickly as possible; it is important that you make that same commitment khổng lồ 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, & 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 & 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 lớn finalize our due diligence & negotiate definitive documentation, subject to a 60-day extension if OUR NAME is working in good faith to lớn 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 & its Shareholders. In order khổng lồ complete our due diligence và to secure the additional requisite capital, we will need reasonable access to Company information and the ability to mô tả that information with our prospective equity partners and debt financing sources in a manner that protects the confidentiality of your information và our discussions. A draft size of the exclusivity & confidentiality agreement is enclosed as Exhibit A for your consideration (the “Exclusivity và Confidentiality Agreement”). We emphasize our desire to lớn complete the proposed Transaction in an expeditious & efficient manner and our readiness khổng lồ mobilize resources to lớn move ahead quickly. To that end, và assuming we sign this letter in advance, we would suggest an organizational meeting as soon as possible to lớn agree on the work plan during the Exclusivity Period.

Non-Binding Commitment

This non-binding indication of interest is confidential & may not be disclosed other than to you, the Company, và its advisors on a strictly need-to-know basis. It is not intended, & shall not be deemed, to lớn 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 khổng lồ the immediately following sentence, none of the parties shall be bound in any way in connection with this letter unless & until the parties execute a definitive agreement, & then shall be bound only in accordance with the terms of such agreement. Notwithstanding anything to lớn the contrary in this letter, the Exclusivity & Confidentiality Agreement, once executed by the parties thereto, shall constitute binding obligations of the parties thereto.

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

Very truly yours,

Name

Company Name

Note: This letter of intent(LOI) template is only for educational purposes và 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 lớn the next levelyou may find these resources helpful: