Example Letter of Intent (LOI)

What is a Letter of Intent

A Letter of Intent (LOI) is a formal document outlining the preliminary understanding between two parties who intend to enter into a business transaction. Typically used in mergers, acquisitions, and purchasing agreements, an LOI sets forth the key terms and conditions, such as purchase price, assets included, due diligence timelines, and confidentiality agreements.

While generally not legally binding, an LOI demonstrates the parties’ serious intent to negotiate and finalize a definitive agreement, providing a foundation for moving forward with the transaction. Below is an example LOI. To Learn More, Read Our Post.

*Please note, we are not attorneys and recommend you seek professional legal advice whenever negotiating contracts.

Example LOI

[Your Name]
[Your Address]
[City, State, ZIP Code]
[Email Address]
[Phone Number]
[Date]

[Seller’s Name]
[Seller’s Address]
[City, State, ZIP Code]

Dear [Seller’s Name],

Re: Letter of Intent to Purchase [Business Name]

I am pleased to submit this Letter of Intent (“LOI”) to outline the terms and conditions under which [Your Name or Your Company Name] (“Buyer”) proposes to purchase [Business Name] (“Business”) from [Seller’s Name] (“Seller”).

1. Purchase Price: The proposed purchase price for the Business is $[Purchase Price], payable as follows:
   • A down payment of $[Down Payment Amount] upon execution of a Definitive Agreement.
   • The remaining balance of $[Remaining Amount] to be paid [Specify Terms – e.g., in installments over a period of X years, or upon closing].
2. Assets to be Purchased: The purchase will include the following assets:
   • All tangible assets, including but not limited to inventory, furniture, fixtures, equipment, and supplies.
   • All intangible assets, including but not limited to trademarks, trade names, customer lists, intellectual property, and goodwill.
3. Assumption of Liabilities: [Specify whether the Buyer will assume any liabilities of the Business and detail any specific liabilities if applicable.]
4. Due Diligence: The Buyer will have a [Specify Period – e.g., 30-day] period to conduct due diligence on the Business, including but not limited to financial statements, tax returns, contracts, customer and supplier lists, and any other relevant documentation.
5. Confidentiality: Except as otherwise required by law, Seller and Purchaser agree to keep this Letter and its contents confidential and not to disclose the same to any third party (except attorneys, accountants, investment bankers, current and prospective lenders and investors and except to the governmental agencies in connection with any required notification or application for approval or exemption therefrom) without the written consent of the other party. With respect to information provided by Seller or Purchaser in connection with and relating to this proposed transaction, Purchaser and Seller respectively agree to keep all such information confidential which is not in the public domain, exercising the same care in handling such information as it would exercise the similar information of its own and, if requested, to return any such written information to the party providing the same if the transaction does not close; and except as required by law, any release to the public of information with respect to the matters set forth in this Letter will be made only in the form or manner approved by the parties and their respective counsel.
6. Expenses: Each party shall bear its own expenses in connection with the implementation of this Letter and the transaction contemplated hereby, regardless of whether the Definitive Agreement is executed.
7. Seller Transitional Period: The Seller agrees to provide transitional support to the Buyer for a period of [Specify Period – e.g., 90 days] following the closing date. This support will include [Specify Details – e.g., training, introductions to key clients and suppliers, and ongoing consultation].
8. Closing: The closing of the transaction is anticipated to occur on or before [Specify Date], subject to the completion of due diligence and the negotiation and execution of a mutually acceptable Definitive Agreement.
9. Conditions to Closing. The Definitive Agreement should include the following as conditions to Purchaser’s obligations to close: (a) Purchaser, will deliver evidence such as proof of funds, pre-approval, or similar to Seller of its ability to perform its financial obligations contemplated herein within 21 days. Seller will review such evidence to determine, in its sole opinion, if such evidence is satisfactory, if such evidence is not satisfactory, Seller may terminate this Letter; (b) Purchaser shall have completed its due diligence investigation in a satisfactory manner, provided Purchaser will not contact employees, customers or suppliers of the Business without first obtaining Seller’s concurrence as to the method and timing of such inquiries; (c) All necessary consents from third parties shall have been obtained; and (d) All necessary governmental requirements shall have been satisfied; and (e) Other conditions customary in transactions of this type. (f) [Specify Any Other Condition]
10. Warranties and Representations; Indemnification. The Definitive Agreement will include, among other things, customary warranties and representations by Seller and Buyer.  
12. Access to Information. Pending the execution of a Definitive Agreement, Seller will permit Purchaser and its representatives, at times and places that are acceptable to both parties, full and complete access to inspect the Business and the Purchased Assets and will cooperate and make available all books, records and documents relating to the Business or the Purchased Assets. Such inspections shall not interfere with the operations of Seller. Purchaser agrees that Purchaser will not contact the Seller’s employees, customers, vendors or landlords without first discussion with Seller the timing and methods to be used in making such inquiries, and receiving Seller’s concurrence with such timing and methods. 
13. Brokers. Seller and Buyer mutually represent and agree with each other that no agents or brokers have been utilized in the solicitation or negotiation of the sale of Assets or Business, except for [Specifiy any representation here] representing the [specify who the representative is working with here]. All agent and broker commissions shall be paid at the day of closing. 
14. Termination: This LOI will automatically terminate in [Specify Period – e.g., 30-day]  from the execution of this agreement unless both parties mutually agree in writing to extend it or when/if an APA is agreed upon and executed. 
15. Exclusivity: Upon execution of this LOI, Seller agrees not to solicit, negotiate, or enter into agreements with any other party regarding the sale of the Business for a period of [Specify Period – e.g., 30 days].
16. Legal Effect. This Letter of Intent is intended to be a statement of the mutual interest of the parties with respect to a possible Transaction and is subject to execution and delivery of a mutually satisfactory Purchase Agreement.  Notwithstanding any language to the contrary herein, no portion of this letter is or shall be enforceable as a binding agreement, undertaking or commitment of either party except for the provisions of Sections 5 and 14 of this Letter, this Letter is not intended to be a binding agreement and shall not give rise to any obligations between the parties. Further, due to the complexity of the proposed transaction, it is the expressed intention of the parties that except for the provisions of Sections 5 and 14 of this Letter, no binding contractual agreement shall exist among them unless and until the parties shall have executed the Definitive Agreement, which shall contain the provisions outlined above and other terms and conditions customary in this type of transaction, all of which must be acceptable to all parties in their sole discretion.  
17. Governing Law: This LOI shall be governed by and construed in accordance with the laws of the State of [Specify State].

This LOI is intended as an expression of interest only and is not legally binding except for the sections regarding confidentiality and exclusivity. It is understood that this LOI is subject to the negotiation and execution of a definitive agreement between the parties.

We look forward to your positive response and to moving forward with this transaction. Please indicate your acceptance of this LOI by signing below and returning a copy to us.

Sincerely,

[Your Name]
[Your Title, if applicable]
[Your Company Name, if applicable]

Accepted and Agreed:

[Seller’s Name]
Date: _______________

Feel free to adjust the terms and conditions according to your specific requirements. Again, we advise all Sellers and buyers to seek Professional Legal Advice from an attorney prior to entering into any contract.