What is it?
A Letter of Intent (LOI) is a preliminary document that outlines the key terms and conditions of a proposed business acquisition before definitive legal agreements are prepared.
While most provisions of a Letter of Intent are non-binding, an LOI typically addresses important transaction components such as purchase price, deal structure, exclusivity, timing, due diligence expectations, and other major economic and operational terms.
Why it Matters?
The LOI serves as the framework for the remainder of the transaction process. Although it is not usually the final agreement, many of the deal’s most important economic and structural terms are negotiated at this stage. Sellers who focus solely on purchase price may overlook provisions that ultimately affect transaction certainty, after-tax proceeds, and post-closing obligations.
Key Insight:
A favorable Letter of Intent is not necessarily the one with the highest headline valuation. The strongest LOIs balance economics, risk allocation, deal certainty, and alignment between buyer and seller objectives.
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Portions of this material were developed with the assistance of Artificial Intelligence (AI) tools. All information has been reviewed and verified by BaldwinClarke staff for accuracy and appropriateness prior to distribution.